It has been a rough run for social media stock Snap Inc (NYSE:SNAP) on Wall Street. Ever since the company went public in March 2017 at $17 per share, the general trend for SNAP stock has been down and out.

Today, Snap shares trade below $10.

Bulls aren’t giving up hope. With SNAP now depressed to all-time lows, buyout rumors are starting to float around. Specifically, there are murmurs that Alphabet Inc. (NASDAQ:GOOGL) may be interested in buying Snap. Those murmurs are corroborated by the rumor that Google reportedly offered $30 billion to acquire the company back in 2016. Today, Snap’s market cap is just under $12 billion.

Candidly, any optimism regarding a buyout is misplaced. Sure, there may be 99 reasons to be excited about Snap stock under $10, but a buyout isn’t one of them. Instead, the one reason to be excited about Snap stock is that under $10, the stock looks undervalued when you consider the company’s potential to further monetize its deeply engaged core demographic.

Due to healthy long-term fundamentals, not buyout speculation, I think Snap stock looks interesting below $10.

Why Google Won’t Buy Snap

At this point in time, buyout rumors seem somewhat silly, especially from Google.

Google is a big time, mass market company that wants big time, mass market assets. Consider the company’s two core digital advertising properties. Google search is used by essentially every internet user in the world. YouTube is the only billion-user social media app that isn’t in China and isn’t in the Facebook, Inc. (NASDAQ:FB) wheelhouse.

Snap doesn’t fit the Google ideal of big time and mass market. It may have back in 2016, when user growth was robust and it looked like everyone was going to become a Snapchat user. That potential is probably why Google offered $30 billion.

Today, though, the data has changed in a way that would keep Google from buying Snap. Namely, user growth has plateaued and actually declined last quarter. That once-robust user base is now under 200 million, so we are talking about a flattening out of user growth at a very small level. Big time, mass-market potential is a dream that faded yesterday. Today, the dream is niche market domination.

Niche market domination is nice. But, it isn’t what Google wants. Thus, the likelihood of Google buying Snap is very, very low.

Why Snap Stock Could Rally

Although a buyout isn’t going to happen anytime soon, that doesn’t mean Snap stock is going to remain depressed forever. In fact, under $10, Snap looks pretty appealing, particularly if you consider the long-term growth narrative of the company.

At its core, Snap is a social media app that is widely used and loved by young consumers everywhere. The negatives are that the company’s niche focus limits user growth, monetization rates are anemic, and losses are huge. The positives are that that same niche focus actually enables it to remain cool (social media apps tend to lose popularity when they get too big and mom and dad join the platform), monetization rates have potential to grow with rising engagement, and losses should moderate if the user base stabilizes.

My thesis on SNAP stock is pretty simple. This company neither the next Facebook nor the next Instagram. Those apps are too big, and quite frankly, too successful. Snapchat, owing to its niche focus, won’t ever get there. A better comp is Twitter, Inc. (NYSE:TWTR). Twitter dominates its niche of the social media landscape — quick and combining instant news and reactions — and is gradually improving monetization rates, profitability, and overall value.

Snapchat will do the same by dominating its niche of the social media landscape (quick and ephemeral messaging with edge-to-edge, visual first news updates).

Twitter controls about 1% of the global digital advertising market with ~225 million daily active users (if you assume a Facebook standard 0.67 daily/monthly active user ratio). Considering that Snapchat is nearly that big already, could get that big or bigger in five years, and has sky-high engagement rates, there is no reason this company can’t control 1% of the global digital advertising market in five years.

The digital ad market is expected to be $430 billion by then. A 1% share implies $4.3 billion in revenues for Snap. Assuming 225 million daily active users, that would equate to roughly $19 in ARPU. The going rate in this industry for cost of goods sold per user is $4. Meanwhile, Snap should be able to keep opex per user below $10. Do the math: if Snap captures 1% of the digital ad market with 225 million users in five years, this company could net about $5 in operating profits per user, or just over $1.1 billion in total operating profits.

All else equal, that should flow into 60 cents in earnings per share by 2022. A Facebook-Google average 25X forward multiple on that implies a 2021 price target of $15. Discounted back by 10% per year, that equates to a year-end price target north of $11.

Bottom Line on SNAP Stock

Due to its niche appeal, Snap isn’t a huge winner in a long-term window. But, owing to its deep engagement and exposure to secular tailwinds in the digital ad industry, SNAP stock does have solid long-term growth prospects which are being undervalued by the market at a sub-$10 share price. I expect the stock to rebound in the near-term to back above $10, and reasonably see 50%-plus upside over the next 4-5 years.

As of this writing, Luke Lango was long SNAP, GOOG, FB and TWTR.