S&P upgrades Snap Inc to BB- as leverage falls
Snap Inc’s issuer credit rating has been raised from B+ to BB- by S&P Global Ratings, with analysts projecting further leverage reduction and share upside potential exceeding 30 per cent.
S&P Global Ratings has upgraded Snap Inc’s issuer credit rating to BB- from B+, a move that reflects the technology company’s improved financial standing and reduced debt burden. The rating agency also upgraded the credit rating on Snap’s unsecured notes to BB-, assigning a positive outlook to the debt instruments.
The decision was driven by a significant decline in leverage, with S&P noting that Snap’s adjusted gross leverage dropped to approximately 4.7 times for the 12 months through March 2026. This represents a substantial improvement from the 6.7 times recorded a year ago. Concurrently, the firm’s free operating cash flow to debt ratio increased to 16.2 per cent, up from 8.5 per cent over the same period.
Looking ahead, S&P anticipates that Snap’s leverage will continue to contract, falling to around 4.0 times in 2026 and further to 2.5 times by 2027. The rating agency attributes this projected improvement to expanding advertising sales, growth in the subscription business, and ongoing cost-cutting efforts that are expected to bolster profitability.
Snap Inc, the parent company of the visual messaging app Snapchat and manufacturer of Spectacles AR glasses, generates the majority of its revenue from advertising. The platform boasts nearly a billion monthly users globally. While the company faces competition in the digital advertising space, the improved credit metrics provide a stronger foundation for its capital structure.
Market analysts have responded positively to the fundamental improvements, projecting more than 30 per cent upside potential for Snap shares from current levels. The upgrade strengthens the investment case for the social media firm, aligning with broader institutional interest in companies demonstrating clear paths to deleveraging and cash flow generation.
