Snap Stock Surges on AI Hype — While an Activist Investor Wants to Tear the Company Apart

Snap’s stock increased by over 6% on a Monday afternoon in mid-April. Then it continued. It was trading at $5.60 by Tuesday’s close, up almost 9% for the day. This was an abrupt and dramatic change for a company that had only a few weeks prior been struggling close to its 52-week low. Someone most likely nodded in the offices of whatever hedge funds were keeping an eye on the ticker. Most likely, someone else shrugged. The problem with Snap stock in 2026 is that. Now, no one is quite sure how to interpret it.

The company, which began operations in a Stanford dorm room in 2011, became a cultural phenomenon among American teenagers, and went public in March 2017 at a valuation that truly thrilled Wall Street, is currently trading at about $5 per share. It was close to $83 at its peak. Numerous factors contribute to that decline, including competition from Instagram, the TikTok era, a poorly executed app redesign that alienated its core users, years of unprofitability, and an advertising company that never fully persuaded brands that it was worth a premium over Facebook or Google. Five years later, investors who invested $1,000 in Snap now have about $82.

Observing Snap’s recent trading, it seems as though the market is still unsure if this is a slow fade or a turnaround story. CEO Evan Spiegel’s description of artificial intelligence as “probably the best thing that’s ever happened” to the company, which sounds both sincere and carefully calibrated for an audience of skeptical investors, contributed to the recent gains. Simultaneously, Specs Inc., a hardware subsidiary of Snap, announced a multi-year agreement with Qualcomm to use Snapdragon XR chips in its upcoming AI smart glasses, which are anticipated to launch later in 2026. Additionally, the business announced an augmented reality collaboration with the Los Angeles Dodgers that will bring AR camera experiences to Dodger Stadium. When combined, they depicted momentum. It’s another matter entirely whether the momentum is appropriate.

The story found in the user metrics is the more difficult one. The number of daily active users in North America has decreased from over 100 million to 94 million in just one year. This is Snap’s most valuable audience, with an average revenue per user of $10.80 compared to $1.24 worldwide. On its own, that decline isn’t disastrous, but it indicates a structural issue that is challenging to address. The majority of the young Americans who made Snapchat feel vital in the early 2010s have since switched to Instagram Reels and TikTok. They are still reached by Snap, but it no longer commands their full attention. Additionally, in the social media industry, attention is crucial.

This equation might eventually be altered by Snap’s investments in augmented reality and artificial intelligence. One of the more tangible achievements in the consumer AI hardware race is Meta’s Ray-Ban smart glasses, which were created in collaboration with EssilorLuxottica. Snap has been in the augmented reality space longer than nearly anyone else. For years, the Spectacles developer glasses have existed in different forms, sitting in labs and at developer conferences, occasionally attracting attention but never turning into a product that the general public actually uses. Although “serious about bringing something to market” and “having a hit product” are still very different things, Specs Inc.’s Qualcomm deal is the strongest indication to date that Snap is serious about launching something in 2026.

An additional layer is added by the story of the activist investor. In a letter to Evan Spiegel in late March, Irenic Capital Management, which oversees approximately $2.5 billion in assets and owns about 2.5% of Snap’s Class A shares, outlined what they called “6 Steps to 7X”—a strategy to raise the stock from $3.93 to $26.37. The suggestions were direct, as is often the case in activist letters when the writers have concluded that being courteous is ineffective. Turn off or shut down Specs. Use AI to handle the work of 1,000 workers, or roughly 21% of the workforce. Justify expenses. “Snap should not continue doing what it has been doing,” the letter’s opening sentence said, leaving little opportunity for diplomatic interpretation. It’s not functioning. Michael Lynton, the chairman of Snap, cautiously replied that the business “welcomes input from all shareholders.” Days later, Specs announced a deal with Qualcomm, which appears to be a direct response to the suggestion that the glasses unit should be shut down, at least in part.

When Snap releases its earnings later this week, Wall Street analysts anticipate that it will report first-quarter revenue of roughly $1.53 billion, up roughly 12% year over year. That growth would be respectable but not revolutionary. It is still anticipated that the company will report a loss of about 8 cents per share. Snap’s gross margin has been gradually increasing, and the company’s February announcement of a $500 million stock repurchase program indicates that it is at least considering giving shareholders their money back. However, this stock’s earnings reports have historically been erratic, with a 12% decline following one quarter, an 18% increase following another, and a steep decline the following quarter. The response could be almost anywhere, regardless of what the numbers show this week.

It seems like Snap is at one of those real turning points that are discussed in business school case studies years later when you watch the company handle all of this at once: activist pressure, an AR hardware bet, declining North American users, an AI pivot, and an earnings report with real consequences. Either Snap’s growth story is altered by the investments in Spectacles and AI, or the company gradually shrinks and becomes less expensive, making it more appealing as an acquisition target rather than a stand-alone growth company. That uncertainty is precisely reflected in the $5 stock price. There is still no verdict.