Snap expands into public, interest-based conversations with new ‘Topic Chats’ feature

What happened

Snap announced a new “Topic Chats” feature that creates public conversation spaces around shared interests, extending Snapchat beyond its historical focus on private, friend-to-friend messaging. These topical rooms, spanning areas like Formula 1 and reality TV shows, effectively add a lightweight, community-style layer that can deepen engagement around events and fandoms. Strategically, this aligns with Snap’s broader push to grow its content and creator ecosystems (Spotlight, publisher content) and should create additional, context-rich ad inventory that is attractive for direct-response and brand campaigns. The move also nudges Snapchat closer to the competitive arena of more public social networks, bringing incrementally higher moderation, safety, and product-execution risk alongside the potential upside in engagement and monetization. Overall, Topic Chats is another engagement lever that could support ARPU and ad revenue over time, but it does not, on its own, resolve Snap’s structural challenges around profitability, infrastructure costs, and platform dependence highlighted in the DeepValue report.

Implication

For investors, Topic Chats is a measured positive in that it can increase time spent, deepen community engagement, and create more targeted ad inventory tied to high-intent interest groups, all of which support the existing narrative of improving direct-response ad efficacy. If adopted at scale, these public conversation spaces could help stabilize or lift ARPU, particularly in mature markets, and provide more surface area to sell both brand and performance campaigns. However, the feature pulls Snap further into the public-social arena dominated by larger rivals like Meta and YouTube, which could intensify competitive benchmarking and raise content-moderation and safety costs, impacting already fragile margins. There is also product risk: if Topic Chats changes the feel of Snapchat too aggressively away from private communication, it could dilute its Gen Z differentiation rather than reinforce it. Net-net, Topic Chats should be monitored as a potential incremental driver of engagement and ad yield, but until there is clear evidence of sustained ARPU uplift and efficient cost scaling, the risk/reward profile outlined in the HOLD/NEUTRAL thesis is largely unchanged.

Thesis delta

The launch of Topic Chats modestly reinforces the bull case element of Snap as a multi-surface engagement platform with growing avenues for ad monetization and potentially better ARPU, especially if interest-based communities gain traction. At the same time, it incrementally increases execution and moderation complexity and places Snap in more direct comparison with large public-social platforms, which could pressure costs and differentiation if not carefully managed. On balance, this feature is a small positive development but not sufficient to shift the stance from HOLD/NEUTRAL without corroborating data on engagement, ARPU, and margin impact.