At What Price Does $SNAP Become ‘Cheap’?

I don’t think about Snapchat too often. I kind of chalked them up to the social media misfits, piled in with YELP, TWTR, GRPN and ANGI. My 20 year old son has been a great barometer of SNAP’s grasp on the minds of the youth and he’s been using it a lot less — opting more for Instagram. My youngest aren’t allowed to ever download the app, as I deem it now tantamount to contracting brain cancer during the school year.

Over the past week, SNAP’s shares have tumbled by another 10%. Over the past six month’s, SNAP has done nothing but pile losses atop of losses — down 37% over that period.

When does the stock become cheap?

At the present p/s valuations, it’s trading 27x sales. Is that cheap?

FB is 15x and TWTR is 5x, so I’m guessing no.

What if SNAP got cut in half again? That’d bring the PS down to around 13x present year. If we extrapolate their growth rate one year out, we can place their FPS at around 7x.

At $7, SNAP would be cheap, compared to FB, but still at a premium to TWTR. I suppose that’s fair, since TWTR is a poorly run company by zealots who lack zeal.

If forced to guess the bottom, I’d say somewhere between $7-10, based off current revenue estimates.

Now if you’re long SNAP here, why is that? Are you merely throwing mashed potatoes at the ceiling, hoping they don’t fall on your head? Just because a stock is hated, that doesn’t mean it’s a buy. You can’t invest based upon the actions of others. To suggest that Joe Schmo is a ‘contrary indicator’, therefore making your decision to counter him justified is plain stupid and would never be tolerated by any regulators.

Other than that, give me a few good catalysts that would make me want to own SNAP.

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