Shares of Snap Inc. (NYSE: SNAP) haven fallen as much as 11% since third-quarter results were released on Tuesday. The results were better than expected, and at least six analysts have raised their price targets since the results. The consensus seems to be that the stock has traded lower due to soft fourth-quarter guidance \u2013 however, the price action may have more to do with market expectations than the company\u2019s performance. Analyst estimates aside, the results were about as good as one could have hoped for six months ago. Snap earned revenue of $446 million during the quarter, 49% higher than a year earlier and $10 million ahead of estimates. A Path to Profitability The Non-GAAP loss per share of $0.04 was one cent ahead of consensus estimates and brought the company a lot closer to break even at the operating level. Ad revenue per user rose to $2.12, a 33% year over year increase. Daily active users grew 24 million year-on-year to 210 million \u2013 7 million ahead of estimates. Operating expenses fell as a percentage of revenue from previous quarters and from a year ago. The gross margin is also improving steadily. Revenue guidance of $540 to $560 million for the fourth quarter was lower than the $554 million analysts had forecast. However, this range still implies revenue growth of 38 to 43% from Q4 in 2018. Expectations Still Too High Snap is edging closer to being profitable, and most metrics are heading in the right direction. However, it will still take some time to justify the current valuation. These are all impressive numbers. The problem is, despite falling 28% from September\u2019s high, the share price is still up 170% since December. The rally was driven as much by momentum, as by fundamentals, and expectations are probably still too high. Snap is edging closer to being profitable, and most metrics are heading in the right direction. However, it will still take some time to justify the current valuation. If revenue growth slows, it will take even longer. The Long Term Is Full of Unknowns The company is betting on augmented reality to grow revenue in the future. This could work out very well \u2013 but as we have seen, nothing is certain when it comes to augmented reality or social media. At the end of the day, there\u2019s a speculative element to betting on Snap. It\u2019s difficult to imagine a catalyst in the near term that will reignite a momentum rally either. In the short term, if the price breaks out of the current downtrend, it may well rally back up to the highs at $18, but it will struggle at that level. That still implies a potential 30% trading play \u2014 but for long-term investors, Snap has to be viewed as speculative.