Snap Eyes AR Glasses Spinoff: Bold Move or Desperate Pivot?

Snapchat's parent company weighs splitting its augmented reality glasses division into standalone entity—betting big on wearable tech's future.

The Strategic Shift

Snap considers spinning off its AR hardware unit amid growing pressure to monetize beyond advertising. The move signals deeper commitment to hardware—but raises eyebrows among investors burned by tech's 'next big thing' promises.

Market Realities

AR glasses face stiff competition from Apple, Meta, and Google. Snap's Spectacles gained cult status but never mass adoption—now the company gambles that independence might spark the innovation needed to break through.

Financial engineers pop champagne whenever a struggling division gets spun off—nothing creates shareholder value like repackaging unmet potential into a separate ticker symbol.

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At the same time, Snap is facing other challenges. In fact, executives are concerned that Gen Alpha (kids born after 2010) are using Snapchat less than previous generations, partly due to stricter phone policies at schools and lower smartphone use among younger kids. Adding to the pressure, some key executives have recently left the company. As a result, Snap’s stock has fallen sharply, from over $83 in 2021 to around $7, and recent earnings results have disappointed. This is especially notable when compared to platforms like Meta and YouTube (GOOGL), which are seeing strong double-digit ad revenue growth.

To keep creators engaged, Snap has introduced features like Snap School and ad revenue sharing, which have helped influencers earn millions. However, Snapchat’s focus on private messaging limits how much advertising it can run compared to TikTok or Instagram, which thrive on algorithmic feeds. In addition, a previous redesign that was meant to push more TikTok-style Spotlight videos was quickly abandoned after receiving backlash. Therefore, Snap is increasingly betting on Spectacles to drive its future growth, despite the glasses still being expensive, bulky, and far from widely adopted.

Is SNAP Stock a Good Buy?

Turning to Wall Street, analysts have a Hold consensus rating on SNAP stock based on four Buys, 22 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average SNAP price target of $9.27 per share implies 29.4% upside potential.