1 Stock Down 18% to Buy and Hold for 10 Years

Prosper Junior Bakiny, The Motley Fool

Sat, Mar 22, 2025, 3:45 PM 5 min read

The recent stock market sell-off is dragging down many corporations, including Snap (NYSE: SNAP), a social media specialist. Though the company ended 2024 with strong momentum, its shares have declined by 18% since January. Still, there are good reasons to be bullish on Snap. The company's long-term prospects look attractive despite a turbulent past few years. Read on to find out more.

Snap, the parent company of Snapchat, became publicly traded in March 2017. Since then, the company's performance has not been impressive, to put it mildly. The tech leader has encountered several problems. To name just three of those issues: Some social media platforms copied its signature self-destructing pictures and videos model; an iOS software update made it harder for the company to launch targeted ads; and a significant slowdown in ad spending amid economic challenges led to worse-than-expected revenue.

The result has been inconsistent top-line growth and persistent net losses, which is not a recipe for success for any company. However, Snap's financial results for much of last year, including the fourth quarter, were pretty strong. The company's revenue of $1.6 billion for the period was up 14% compared to the year-ago quarter. Snap turned in a net income of $9 million compared to a net loss of $248 million reported in Q4 2023, while its adjusted earnings before interests, taxes, depreciation, and amortization (EBITDA) landed at $276 million, up 73% compared to the year-ago period.

Several other key metrics, including Snap's free cash flow, improved. Snap's Q4 results weren't just a fluke. The company's business is improving and could deliver excellent results over the next decade.

Snap still makes most of its money from ads. So it's crucial for the company's platform to continue growing its users. The social media specialist is making progress. In Q4, Snap's daily active users (DAUs) climbed by 9% year over year to 453 million. In addition, Snap continues to launch features on Snapchat that help increase engagement, with artificial intelligence (AI)-powered ones being popular.

In Q4, Snapchat's "Me in the 60's," a feature that generates a picture of what a user would look like in the 60's, was viewed more than 900 million times. So long as Snap has a growing base of users who engage in projects like these, Snapchat will be a good target for companies looking to reach potential customers. And in recent years, the company has improved its advertising platform thanks to machine learning.