Foundations likely to see increased requests from New Mexico nonprofits after federal cuts
Two weeks before the first truck was scheduled to arrive, however, staff at the Santa Fe food bank learned the goods — a mix of expensive and tough-to-source groceries like yogurt, milk, chicken and produce from a U.S. Department of Agriculture program — weren't coming after all, executive director Jill Dixon said.
The Emergency Food Assistance Program was hit in March with $500 million in cuts, the latest in a string of federal food-related policy changes.
'Food banking requires planning, so it meant that there was just a gap,' Dixon said. 'For The Food Depot, that gap translated to approximately $200,000.'
Such a loss is a common story for New Mexico nonprofits these days. A new report jointly commissioned by the Thornburg Foundation, Anchorum Health Foundation and Santa Fe Community Foundation surveyed more than 200 nonprofits across the state and found 'federal funding cuts may disproportionately affect New Mexico.'
About 37% of the state's nonprofits receive some kind of federal support, the sixth highest level in the nation, with one in five getting the majority of their funding from federal grants.
Some $1.1 billion has been awarded to those surveyed with only about half paid out so far. The other half of that money can be clawed back — and in some cases already has been terminated by the federal government.
Philanthropic funders are likely to see a surge in requests from nonprofits competing for private dollars to offset their losses, the study found, estimating foundations would have to increase their giving by 282% to replace terminated grants.
060525_MS_Food Depot_002.JPG
Eloy Almoner receives groceries from The Food Depot last week. Executive director Jill Dixon said previous federal aid cuts were "small potatoes" compared to proposed changes to the Supplemental Nutrition Assistance Program in President Donald Trump's "Big, Beautiful Bill," which wants to strip $267 billion in SNAP funding by 2034.
Foundations would spend down their savings in short order to fill those gaps, said Allan Oliver, president of the Thornburg Foundation.
'The need is really, really significant,' he said, noting 'not all nonprofits wish to be public about the situation with their federal funding.'
Nonprofits — which provide about 8% of the jobs in New Mexico's private-sector workforce, according to data from the U.S. Bureau of Labor Statistics — 'are making extremely hard decisions right now,' Oliver said.
'These are agreements that the federal government made with these nonprofits — and the nonprofits are holding up their end of the deal,' he added. 'It's really up to the federal government to hold up their end of the deal.'
'Extremely hard decisions'
Programs in the state focused on food security have seen a significant toll.
The National Center for Frontier Communities, a 30-year-old nonprofit based in Silver City, hasn't been able to draw down about two-thirds of a four-year, nearly $400,000 Community Food Project grant from the Department of Agriculture since January, CEO Ben Rasmussen said.
The grant funded a project supporting the local food landscape in the small, remote towns Frontier Communities serves. Among its initiatives are the development of an agricultural training center and assistance in increasing local producers' sales to a self-sustainable level.
Rasmussen takes pride in serving communities that are often 'quite literally the last stop on the road,' he said.
The center's home base in Silver City means the southwestern corner of New Mexico often serves as a 'testing ground' for new initiatives that could have a nationwide impact on remote communities — many of them Indigenous and agricultural, with low-income populations.
'We are still in compliance with the grant, and we are still moving forward,' Rasmussen said of the federal funding. But, he added, 'What's at risk is this momentum. ... It really forces you to think about what's important to you and your organization.'
060525_MS_Food Depot_001.JPG
Volunteers load groceries into a waiting car during a food distribution effort at The Food Depot last week. Executive director Jill Dixon says federal cuts to food stamps will create an untenable demand at The Food Depot and other food banks. 'We are not built to be first line for food-insecure families,' she said.
'The writing on the wall'
Ladona Clayton's organization hasn't yet experienced any direct federal funding cuts, but she fears revenue might dry up — and with it, Eastern New Mexico communities.
Clayton is executive director of the Ogallala Land & Water Conservancy, a nonprofit working to ensure water security for Clovis, the Cannon Air Force Base and parts of Curry County by compensating landowners for retiring their irrigation wells and putting conservation easements into place to keep water underground.
The stakes couldn't be higher, Clayton said: 'If we don't save, preserve, store as much groundwater as we possibly can, we don't survive.'
But it takes federal dollars to make that work happen.
'We can see the writing on the wall,' she said, referring to the potential for federal funding cuts.
The Ogallala Land & Water Conservancy is primarily funded by the U.S. Department of Defense's Readiness and Environmental Protection Integration Program — thanks to the Air Force base — and the Department of Agriculture's Natural Resources Conservation Service, Clayton said.
She's been warned to expect steep competition for the next round of Readiness and Environmental Protection Integration Program dollars.
About a year ago, the conservancy contracted with a consulting firm to search for other federal grant options. In the months since, Clayton said, 'Every one of those doors closed on us.'
She's also applied for and received approval for seven conservation easements through the Natural Resources Conservation Service. Three have already been funded; money for two more is set to come through. But two remain unfunded.
'That is where we find ourselves, but we're working aggressively to do what we can. If the funding's not out there ... I think my greatest concern is everyone's now turning to foundations,' Clayton said.
'If we're all moving in that direction ... competition's just going to amp up,' she added.
Fight for private funding
Competition has amped up.
Nonprofits are feeling that, said Leah Ricci, interim executive director of the Santa Fe-based Quivira Coalition, an organization focused on implementing holistic farming methods known as regenerative agriculture. The sustainable practice aims to improve land and ecosystems through biodiversity.
The Department of Agriculture in April canceled the group's Partnerships for Climate-Smart Commodities program — an initiative Agriculture Secretary Brooke Rollins criticized as an effort to 'advance the green new scam.' At the time, the Quivira Coalition was about a year into a five-year, $3.9 million grant, Ricci said.
The organization had planned to use the money to help livestock producers transform waste products, like woody debris or carcasses, into soil amendments, such as compost or biochar.
With the Climate-Smart Commodities funding now gone, Ricci said the Quivira Coalition has pared down its program. It continues to train the 13 producers already recruited.
Nevertheless, the coalition still relies heavily on federal funding, with 65% of its 2025 budget coming from five big federal grants, four of which remain in place.
'We are fortunate, even with 65% of our income coming from federal grants, to have fairly diverse income from foundation grants and from donors,' Ricci said.
'We're being really careful and thoughtful about how we use those general operating support dollars so that we have the opportunity to pivot if needed,' she said.
Going forward, though, foundation grants may become harder to get.
Every grant program the Quivira Coalition has applied for this year has seen an overwhelming number of applications, Ricci said.
The local foundations' new report includes a lengthy list of recommendations for private funders as they prepare for the surge in requests, noting philanthropy 'can and should step in' to support nonprofits.
'They want to be as helpful as possible,' Ricci said of philanthropic funders. 'They also have a limited amount of money, and they're having to make tough decisions about who to award their grant funds to.'
060525_MS_Food Depot_004.JPG
A line of cars wait for food from The Food Depot last week. The Congressional Budget office estimates more than 4 million Americans would lose SNAP benefits entirely as a result of proposed cuts.
Cuts so far: 'Small potatoes'
From Dixon's perspective at The Food Depot, there's more to worry about.
She described the losses of federal assistance the food bank has already weathered as 'small potatoes' in comparison to proposed congressional cuts to critical food aid known as the Supplemental Nutrition Assistance Program, formerly called food stamps.
'The proposed cuts to SNAP [are] really what we're focused on now,' Dixon said.
President Donald Trump's 'Big, Beautiful Bill' of spending priorities is expected to strip $267 billion in SNAP funding by 2034, according to analysis by the Congressional Budget Office. The bill has already passed the U.S. House and is now being considered in the Senate; Trump wants the bill on his desk by July 4.
The Congressional Budget office estimates more than 4 million Americans would lose SNAP benefits entirely as a result of the cuts, while monthly benefits would be reduced by about $15 by 2034 for all remaining participants.
Food stamps are meant to be the 'first and best line of defense' against hunger, Dixon said, while food banks work to fill the gap when SNAP benefits run out. For every meal a food bank provides, SNAP provides nine, according to the nationwide hunger relief organization Feeding America.
Slashing SNAP will likely result in untenable demand for The Food Depot and other food banks, Dixon said.
'We are not built to be first line for food-insecure families,' she said, 'and the proposed cut in the bill as it stands today is the largest and deepest cut to the SNAP program in its history.'
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Chicago Tribune
2 hours ago
- Chicago Tribune
‘A terrible position': Illinois sprints to lower new SNAP costs without booting people who need it
As an outreach coordinator for one of the Chicago area's largest food banks, Joann Montes is already seeing an impact from President Donald Trump's reductions to public assistance programs even before those cuts take effect. Anxious older adults who for years received what were once called food stamps are approaching Montes at senior centers to ask if those benefits will continue and whether they'll have to return to jobs 'to be able to feed themselves.' 'Our folks who are 60 and older are asking questions about whether they're going to be able to receive SNAP,' Montes, who works at the Greater Chicago Food Depository, said about the Supplemental Nutrition Assistance Program. 'Will they have to go back to work?' A little more than a month after Trump signed into law a sweeping Republican domestic package that expanded work requirements for SNAP benefits to previously exempt groups such as adults ages 55 to 64, the state and people receiving benefits are getting ready for a recalibration. Democratic Gov. JB Pritzker's administration is sprinting to figure out how to avoid a potential $700 million price tag by changing operations to achieve a level of payment accuracy that the vast majority of states currently do not meet. At the same time, Illinois also must handle the federally mandated work requirements on new groups that experts say could lead to people losing benefits. 'It would be almost easier if the federal government just did what they set out to do, which is say, 'You are no longer going to be eligible for this program.' But instead, they are putting states on the front line to create bureaucratic barriers to turn individuals and families away,' Grace Hou, the deputy governor covering health and human services, said at a panel discussion in Joliet on Friday. 'These cost savings in the Trump spending bill will result in families getting kicked off their benefits because they can't manage the red tape.' In all, about 1.9 million Illinoisans receive aid through SNAP, which provides assistance for low-income families to buy food. The program's benefits have been fully funded by the federal government for six decades, while the administrative costs have been split between the federal government and states. Monthly benefits in Illinois among people receiving assistance averaged $192 for each member of a household in fiscal 2024, or $6.33 per day, according to the Center on Budget and Policy Priorities, a progressive think tank. But state officials say the changes written into the new federal law could place hundreds of thousands of Illinoisans at risk of losing those benefits. That jibes with a recent Congressional Budget Office report that estimated about 2.4 million fewer Americans will receive food assistance as a result of the new work requirements. 'Here the state is with less money and more challenge, going to have to take lemons and turn it into lemonade,' said Danielle Perry, vice president of policy and advocacy at the Food Depository, which, on top of its work as a food bank, helps people apply for and keep SNAP benefits. The GOP-led megabill that Trump signed into law July Fourth extends tax breaks that were set to expire and expands spending for the military and border security, funded in part by cuts to SNAP and Medicaid. 'Illinois' goal is to mitigate to the greatest extent possible the impact of the Trump spending bill on the SNAP program, and try to mitigate the harm it's going to wreak on poor families across the state,' Hou said in a separate interview with the Tribune. 'Our administration is going to do everything in our power to quickly put our structures in place to protect Illinois families.' Among the biggest reasons Illinoisans might get cut from SNAP is because of the key provisions in the megabill that initiate new work requirements for recipients who were previously excluded. The GOP bill expanded work requirements for able-bodied adults ages 55 to 64 — the cohort Montes was referring to — and those with dependents age 14 and older, among other groups. About one-third of SNAP recipients in Illinois are in a household with someone older than 60 or who has a disability, according to the progressive CBPP. What's more, many Illinois SNAP recipients have been exempt from work requirements altogether for years because of a waiver tied to unemployment in the state. But that exemption is expected to end this year, as the new bill hikes the state unemployment threshold. States are awaiting guidance from the federal government on the new work requirements, including the timeline for implementation. 'This will create a constant churn of applications as people fall on and off eligibility,' Illinois Department of Human Services spokesperson Rachel Otwell said in an emailed has already included funding in its budget for about 100 new caseworkers and operations staff with IDHS to begin addressing the added paperwork that is expected to be created from the new requirements, as well as changes to Medicaid. Officials with the Pritzker administration said they anticipated earlier this year that they would need additional staff even without knowing the specifics of the Republican-led tax bill. Now, the department is looking into the number of additional staff it might need to deal with SNAP changes, according to the governor's office. Beyond that workload, Illinois faces potentially hundreds of millions of dollars in added costs. The Republican-led bill raises the administrative levy for states, which in Illinois would mean spending an additional $80 million, according to the governor's office. Those costs are expected to kick in October 2026, according to the Center for American Progress think tank. Plus, any further improvements to computer or communications systems will likely cost even more, at a time when the state will likely be looking to keep costs down, said Jeremy Rosen, director of economic justice at the Shriver Center on Poverty Law. But most crucially, Illinois could be on the hook for an additional annual $700 million bill to pay for some of the benefits, according to the governor's office, though that contribution could be eliminated if the state manages to bring down a measure known as the payment error rate. The combination of costs and new requirements puts the state in 'a terrible position,' said Alicia Huguelet, a senior fellow at the CBPP who previously worked as a program administrator at IDHS. As one of several factors that experts use to gauge the success of a state's SNAP program, the payment error rate isn't a measure of fraud, but rather overpayments or underpayments commonly resulting from mistakes by applicants, staff or computer systems. Illinois' error rate is among the 15 worst in the nation, though Pritzker has defended it as comparable to other large states. 'We are working very hard to make sure that we've got a process for determining the eligibility of people, making sure we hit the error rate that we need to as best we can, and we're working very hard every single day to effectuate that, but it's going to take money to do that,' Pritzker said Wednesday, noting to reporters at an unrelated news conference in Springfield that the new requirements do not come with funds for implementation. Efforts to lower the payment error rate can result in people being removed from the food assistance program, Rosen and other experts said — an outcome the state says it's trying to avoid. Still, starting in October, the state said it will be in a yearlong sprint to bring down the error rate measure ahead of cost-sharing measures that go into place after the year is up. If the rate comes down below 6% — from more than 11% currently — by fall 2026, then Illinois could avoid the more than $700 million burden, which would take effect starting in fall 2027. The state has said it can't cover that expected contribution, which is close to the looming transit fiscal cliff or the entire amount by which Illinois increased its operating revenue for the current fiscal year. To bring down the rate, IDHS is using an existing contract with Deloitte to diagnose exactly where those mistakes happen and what changes could be made to the program, according to the governor's office, which did not provide an estimated timeline on those efforts. IDHS is also reviewing its own policies to see how it could reduce the error rate, according to the state. Close to half of the payment errors in Illinois come from inaccurate wage and benefits data, including errors in what people report as their income, the state said. As a result, the governor's office said Illinois is exploring whether it could implement more stringent verifications in some areas, rather than relying on self-reporting, which is typically faster. But trying to bring down the error rate while also needing to implement new work requirements poses a major challenge, experts and the state said. 'If the application process is more stringent … it will be definitely a challenge,' said the Rev. Gary Gaston, CEO at Lessie Bates Davis Neighborhood House, a social services organization that Pritzker visited earlier this summer to highlight the challenges to SNAP. 'People have gotten acclimated to the current process. Any new processes that will be put in place could be challenging.' In the East St. Louis area where Gaston works, people might have difficulty finding work to meet the new requirements, and in some cases also face a lack of transportation options to make appointments, he said. On top of that, the area is already considered a food desert, with no major grocery store in the city — 'a double whammy,' he said. Demanding more information and verification up front can make it harder for people to access benefits, which is likely to result in some people losing benefits, Rosen at the Shriver Center said. The Pritzker administration, for its part, argues that the loss of benefits that could come from efforts to reduce the error rate is an intentional move by the Trump administration to reduce benefits and, in turn, lower the cost of the program to the federal government. Still, the state said it's working to reduce the rate in a way that keeps as many people as possible from losing benefits, as lowering the measure is the only way to avoid the massive potential $700 million bill. 'We want to make sure that we're actually delivering to the maximum number of people that need SNAP,' Pritzker told reporters Wednesday at the state fair, emphasizing that both underpayments and overpayments are considered errors. 'Republicans don't care that we're under-providing. They just want to cut everybody off of SNAP, and that is why they've set this SNAP error rate so low.' Haywood Talcove, CEO for government at LexisNexis Risk Solutions, said he wants to see Illinois and other states simplify their application process for benefits — in an effort to both reduce fraud and improve the experience for people who need benefits — from lengthy paperwork with many self-reported boxes to basic identification information and verification. Republicans have cited fraud and waste as reasons to crack down on parts of the benefits program, and Talcove, who is based in Washington, testified at a Republican-led congressional hearing this year about benefits fraud. If states are pouring millions into benefits and changes to the program, Talcove said, 'I'd like you to fix it, please.' The governor's office has noted that SNAP fraud is not the same as the error rate and that any fraud comes out of $4.7 billion in SNAP benefits that the state issues each year. Statewide, Illinois found about 0.07% of SNAP cases had an intentional program violation, which would have resulted in an IDHS penalty and potentially a court penalty, according to the governor's office. Additionally, there were more than 23,000 claims that benefits were stolen from recipients last year and an estimated $12.5 million in that type of fraud, according to a report from IDHS to the General Assembly. Rosen of the Shriver Center said the state should aim to get the information it needs, 'without being in a world where we make people bring so much stuff so often that they fall off the program.' 'Because inevitably somebody's kid gets sick, so they miss the appointment, and they can't take the three-hour bus ride to get to the office, the website doesn't work and they can't upload something. Those are not good reasons for people to be cut off who are eligible,' he said. In six years at the food bank and more than two decades working in social services, Montes said SNAP has felt 'stable, as far as the rules are concerned.' Now, even the work requirements by themselves are 'going to isolate many people from food, from accessing food, just that alone,' she said. 'Personally, it scares me.'
Chicago Tribune
2 hours ago
- Chicago Tribune
Stacy Davis Gates: Chicago families deserve to go back to fully funded schools
For the first time in years, when parents drop off their children to school this year, they will be in smaller class sizes. Elementary students will have access to the state-mandated recess Chicago Public Schools previously didn't provide. Libraries are reopening. Our homegrown national model for public education, sustainable community schools, is expanding to 16 more campuses this year. Black students will be taught in classrooms where the right to learn their history is enshrined in our contract and all students will have greater access to sports, arts, music and a nurse and counselor. School will be one of the safest places immigrant students can be due to our expanded sanctuary protections. Students with disabilities will be supported by 215 new case managers. LGBTQ+ students will arrive at schools with staff support, access to all-gender restrooms and protocols against bullying. All of these improvements to the school day are a result of the contract educators fought hard for over the past year and ratified in April. And they all require the governor and Democratic majority in Springfield to pay our district what is owed. While parents were fulfilling back-to-school shopping and educators were equipping classrooms with supplies out of their own pockets, the state that withholds money from CPS was holding a hearing to find out why the district is in financial trouble. The answer is obvious. It's a choice. It is not a math problem. The difference between a cost and an investment is one's values. The difference between a deficit and a robbery is one's tax bracket. At a time when Illinois' wealthiest 5% are getting handed $8 billion in tax cuts from President Donald Trump, Gov. JB Pritzker's budget provided $10 billion in tax breaks and other incentives at the state level to tech corporations and the ultra-rich. Combine those and you're looking at $18 billion in giveaways to those who need it least. That's enough to eliminate CPS' entire $1.6 billion funding gap more than 11 times over. The governor says he wants to fund Illinois schools fully, but has yet to create a budget to reflect that desire. Meanwhile, books are locked in libraries because schools don't have librarians. We're losing art and music teachers at schools deemed 'fine arts.' High schools operate without math and science teachers. CPS just laid off crossing guards, security guards, janitors and — at a time when Trump is cutting SNAP for families — CPS is planning to cut the one hot meal some students have access to. Our schools have been cut to the bone and constantly asked to do more with less. But this isn't just underinvestment. It is also extraction. While banks prey on the false scarcity by demanding an even higher premium on loans, research shows that for Cook County is being shortchanged in terms of state funding. For every dollar it sends to the state of Illinois in tax revenue, it receives only 90 cents back. Meanwhile southern regions in Illinois receive $2.81 for every dollar of tax revenue created. The Blackest school district in the state, with the highest homeless student population, the highest bilingual population and the highest special needs population hasn't just experienced disinvestment. Black and brown families in Chicago have been subsidizing the education of students outside city limits for as long as the system has been designed to deprive our own children of equal opportunity. This back-to-school season is the result of more than a decade of work to undo the damage done by privatizers and school closers. We are in the midst of a reconstruction in our city to make good on what formerly enslaved ancestors dreamed of for their descendants when they broke the back of the Confederacy, ended the Civil War, and created public schools, labor rights and public health. We need a partner in our governor and the Democratic supermajority, not just a debt that's past due. We need being a blue state during Trump's authoritarianism to mean something. As much as is spent to try to demonize our union, we're more in-line with the people of our state than anyone arguing for cuts or to deny our children the education they deserve. Ninety-one percent of Illinoisans, when asked, believe in the right to a public education and 71% support increasing funding for schools. When asked where that money should come from, 63% of Americans say raise taxes on corporations and the ultra-rich. States such as Massachusetts are proof positive that this isn't rhetorical, it's successful. There they implemented a millionaire's tax that raised $2.2 billion in its first year alone — double what was expected. This revenue was used for universal free school meals, free community college and transit improvements. No millionaires fled the state. The state's millionaire population increased by 38%. Just last week, Massachusetts adopted an initiative to Trump-proof their education infrastructure while Illinois Democrats hold hearings asking why schools are broke. With 78 Democrats in the House and 40 in the Senate, that's more than enough to call a special session and do the same. Trump is actively dismantling public education, attacking communities of color, and transferring wealth to billionaires. The question for our state is simple: Will you be a beacon that stands up to the president, protects democracy and fights for our children? Or will you passively complement his plan for our schools through inaction? The state set the goal of at least adequately funding our schools by 2027. But the most recent budget opens that gap to $1.6 billion dollars owed instead of closing it. The steps are simple. End the tax breaks. Fund our schools. Turn the political theater into political leadership. Our students are waiting. Stacy Davis Gates is president of the Chicago Teachers Union.
Yahoo
7 hours ago
- Yahoo
After Recent Earnings, What's the Investment Thesis for Snap Now?
Key Points Snap's slower second-quarter growth compared to its peers includes an important footnote. The company's willingness to perpetually evolve and improve its app is no minor detail. Some of these efforts will pay off. Snap is just going to need a bit of time to prove its approach is increasingly marketable. 10 stocks we like better than Snap › It's been a rough past few days for Snap (NYSE: SNAP) shareholders. The Snapchat parent's stock is trading down more than 20% since posting its second-quarter numbers last Tuesday, in fact, and still testing lower lows. The company's revenue miss clearly rattled investors. The question is, is yet another disappointing quarter enough of a reason to finally give up on Snap? Or is this stock's recent setback a chance to step into a compelling story at an even better price? Snap's second-quarter numbers Snap's Snapchat app is a social media platform, albeit a very different one than Meta Platforms' Facebook or X (formerly known as Twitter). Namely, Snapchat doesn't feature a "news" feed like X and Facebook do in the center of their user interfaces. Snapchat's focus is instead on messaging and sharing pictures specifically with friends. The core business is still ultimately the same as any social media site's, though: advertising. More users and usage of the Snapchat app means more opportunities to monetize the platform. And Snap did a fair amount of business during the three-month stretch ending in June. The top line of $1.34 billion for the recently ended quarter was up 9% year over year, lifted by a 9% increase in the average number of daily users (469 million) and 7% growth in average monthly users (932 million). Most of that user growth took shape outside of Europe and North America. Although the company remains in the red with a reported net loss of $262.6 million, or $0.16 per share, free cash flow swung from a negative $73.4 million to a positive $23.8 million this time around. Problem? The analyst community was calling for a top line of $1.35 billion and a per-share loss of $0.15, matching the year-ago quarter's loss. Sales growth guidance for the third quarter (now underway) was in line with estimates, but investors also noticed that these numbers still trail those being reported by Meta and other social media companies. In addition, "an issue related to our ad platform" crimped both the top and bottom lines by underpricing Snap's ad inventory. A company as developed as Snap shouldn't face such self-created glitches. Nevertheless, this stock's subsequent setback is far more of an opportunity than an omen. (Much) more to like in the long run than not Snap's got plenty to figure out. Even while the technical glitch was temporary, it's concerning that user growth has outright stalled in North America and Europe, where average per-user revenue is highest. It's also simply not growing as briskly as its rival platforms are, and perhaps never will. As RBC Capital Markets analyst Brad Erickson noted, last quarter's numbers "will continue to reinforce the bear case that Snap cannot break out of being a smaller ad platform lacking the ability to durably grow its direct response business in line with the market." Just don't lose sight of the bigger, longer-term picture. And that picture is still pretty bullish for a handful of reasons. One of those reasons is Snap's never-ending willingness to learn from its past failures as well as past successes, and then evolve as merited. Case in point: In June, the company announced the augmented reality glasses it's been working on for a while now will be ready for launch sometime in 2026. Its first go-around with "Spectacles" back in 2016 ended up being a bit of a disaster. But those glasses were only a camera, and AR technology has come a long way since then. Undeterred by its previous flop, Snap's next shot at stand-alone hardware is a reasonable risk. In the meantime, the company's doing something far more practical by adding artificial intelligence-powered tools (including AI-generated ads) to its advertisers' toolkit. Its relatively new Sponsored "Snaps" are also producing 20% more conversions than ordinary ads. Perhaps the overarching argument for betting on beaten-down SNAP shares despite them going nowhere since their 2021/2022 rout is that Snapchat still has a long growth path ahead of it. It's difficult to quantify, or even see. But the world is growing weary of the toxicity on Facebook and X. Consumers are increasingly looking for alternative online gathering places where they're in control of what they're exposed to. They're finding less-crowded and more decentralized corners of the web on platforms like Discord, Bluesky, and yes, Snapchat. Indeed, the Snapchat app lends itself to providing what its biggest cohort of users -- the Gen Z crowd, ages 16 to 30 -- craves to the point of demanding it: advertiser authenticity. According to recent research from Target's retail media network Roundel, 73% of Gen Z regularly watch influencers' shopping videos. That's more than 40% above the average. And website hosting service provider WPEngine says 82% of Gen Z is more likely to trust a company that uses real people (like Snapchat's creators) rather than paid actors in its ads. Ads on Facebook and X tend to lack this authenticity, while Snapchat's heavily featured ads from the platform's well-followed creators is about as authentic as it gets. Focus on the long-term marketability of the business It's tough to get excited about buying into any promising business while that business's results are lackluster, and Snap's are. The stock's lingering lethargy isn't helping the bull thesis either. Just bear in mind something that Warren Buffett said long ago that still applies in the modern market environment: "If you aren't thinking about owning a stock for 10 years, don't even think about owning it for 10 minutes." Snapchat's got the right idea and formula. It's just going to take a while to prove it. It's going to take even longer for the market to fully see it. On the other hand, as other investors increasingly do see it, they'll at least start pricing in Snap's promising future. That's why it might be wiser to go ahead and wade into a position now while nobody else is thinking about doing the same. As Buffett has also said, "Be fearful when others are greedy, and be greedy when others are fearful." You can control your total risk just by adjusting the size of the Snap stake you take on. Should you buy stock in Snap right now? Before you buy stock in Snap, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Snap wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $663,630!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,115,695!* Now, it's worth noting Stock Advisor's total average return is 1,071% — a market-crushing outperformance compared to 185% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Target. The Motley Fool has a disclosure policy. After Recent Earnings, What's the Investment Thesis for Snap Now? was originally published by The Motley Fool Sign in to access your portfolio
