Credit Rating Upgrade Strengthens Bull Case for Snap Inc. (SNAP)

Snap Inc (NYSE:SNAP) is among the best Robinhood stocks under $20 to buy now. Analysts see more than 30% upside potential in Snap shares from the current level.

On May 27, S&P Global Ratings upgraded its credit rating on Snap Inc (NYSE:SNAP). It raised the company’s issuer credit rating to BB- from B+. The firm also reviewed its issue-level ratings on Snap’s unsecured notes, upgrading the rating to BB- from B+. It has a positive outlook on the notes.

For the ratings upgrade, S&P Global Ratings cited the company’s lower leverage amid improved operating and financial performance. Regarding leverage, the firm’s adjusted gross leverage for Snap dropped to around 4.7x for the 12 months through March 2026, from 6.7x a year ago. The firm further noted that Snap’s free operating cash flow to debt increased to 16.2% from 8.5% a year ago.

Looking ahead, S&P Global Ratings sees Snap’s leverage dropping as the topline continues to grow and profitability improves. It anticipates the company’s leverage dropping to around 4.0x in 2026 and going even lower to 2.5x in 2027. The rating firm sees Snap’s financial performance benefiting from expanding advertising sales, growth in subscription business, and cost-cutting efforts.

Snap Inc (NYSE:SNAP) is a technology and social media company. It is the parent of Snapchat, a visual messaging app with nearly a billion monthly users globally. The company also makes Spectacles AR glasses. Snap generates the bulk of its revenue from advertising sales.

While we acknowledge the risk and potential of SNAP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SNAP and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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