It's been a rough year for Snap (SNAP 27.63%) stock. Going into the week, shares had slid about 3% year to date. This follows a disastrous 2022, when the growth stock plummeted more than 80%. As the company's top-line growth slowed in 2022 and then turned negative in the first quarter of 2023, there was good reason to worry. With such lousy revenue performance and persistent quarterly net losses, it was unclear whether the company could ever live up to its premium valuation.

But is a new, upbeat update from management that sent the stock soaring about 12% on Monday enough to turn the tables for investors? After all, shares of the parent of social media platform Snapchat are still trading at levels far below where they were a year ago.

Snap is optimistic about 2024

Apparently, management expects a huge rebound in Snap's revenue growth rate next year.

Management told employees in a leaked internal memo that it expects revenue to grow at a rate of more than 20% in 2024. To be fair, the company confirmed with the media that this goal and a target it shared with employees to surpass 475 million daily active users are "stretch goals." So investors shouldn't put too much stock in these forecasts. 

Still, Snap's aspirations are encouraging, even as stretch goals. Consider that the company's revenue in the first half of 2023 fell 5% year over year, with Q2 revenue specifically falling 4%. Further, daily active users of 475 million would represent nearly 20% growth from the company's last reported figure of 397 million. 

Snap also provided a bold outlook for profitability in 2023. It said it expected adjusted earnings before interest, depreciation, and amortization to come in at about $500 million.

Has Snap hit an inflection point?

These bold stretch goals differ materially from the business trajectory the company laid out for investors when it provided third-quarter guidance in its second-quarter update. Snap had said it expected third-quarter revenue to come in between $1.070 billion and $1.130 billion, implying a 0% to negative 5% year-over-year change. Though management admitted at the time that it had limited visibility into advertising demand because it was "in a period of rapid transition as we work to improve our advertising platform..."

Snap's willingness to lay out such bold aspirations for 2024 suggests that business visibility may be improving. Going further, maybe the company's work to improve its advertising products has already led to an inflection point in which robust growth is returning.

Notably, if Snap can truly return to revenue growth rates in excess of 20% while growing adjusted EBITDA to $500 million by the end of 2023, the stock may be undervalued today.

Nevertheless, investors should remain cautious. More clarity may be needed to see just how certain and sustainable Snap's potential return to solid growth is before investors can confidently dive in. The stock's valuation still appears speculative relative to underlying business fundamentals.

Investors will find out exactly how well the company has been doing when it reports its third-quarter results on Tuesday, Oct. 24, after market close.