Snap rallies as robust ad sales lift quarterly revenue above estimates

"Ongoing efforts to improve monetization and scale profitability are beginning to pay off," J.P. Morgan says, adding that demonstrating durability and consistent execution will be critical.

The stock recently traded at 7 times expected earnings, versus a 5-year average of 48, suggesting it may be undervalued, per LSEG-compiled data.

The stock is down 37.5% year to date, underperforming the S&P 500's 11% gain.

Shares of Snap SNAP.N jumped 8% to $5.45 premarket after the social media company beat second-quarter revenue estimates, supported by increased ad spending during the FIFA World Cup and strong campaign activity from large advertisers in North America.

Quarterly revenue of $1.60 billion beat estimates of $1.54 billion, while the midpoint of third-quarter revenue forecast range of $1.70 billion-$1.74 billion is above the $1.70 billion estimate.

Company daily active users rose about 5% to 493 million in the second quarter, but it reported nearly 7% decline in North America and about a 2% drop in Europe.