Why is Snap Inc. stock outperforming the market?

Snap Inc. reported strong fourth-quarter earnings on February 4, 2025, with an earnings per share (EPS) of $0.16, surpassing the estimated $0.14 by 14%. This was accompanied by a $196 million increase in revenue compared to the same period last year. Historically, Snap's ability to exceed earnings expectations has led to positive movements in its share price, evidenced by a 16% increase following an EPS beat in the previous quarter. Analysts have varied perspectives on Snap's stock, with an average 12-month price target of $14.09, reflecting a 7.39% increase from the previous target. Some analysts have raised their ratings and price targets in response to Snap's financial performance. Snap's revenue growth over the past three months stands at 15.48%, outpacing the average growth rate among its peers in the Communication Services sector. However, the company faces challenges with a net margin of -11.16% and a debt-to-equity ratio of 1.92, indicating a significant reliance on borrowed funds. While Snap's consistent record of beating earnings estimates and achieving revenue growth has been associated with positive market performance, the company continues to grapple with issues related to profitability and debt management.