$SNAP is getting annihilated again today, trading down 11% at around the $21 level, already well below Thursday’s open IPO price. Some poor soul paid $29.44 for shares on Friday and it’s already down approximately 30% from the highs in 2 days. This is and will continue to be an extremely volatile stock as “investors” try to determine a fair value for Snapchat’s Penis to Earnings ratio as well as growth of their MADPs (Monthly Average Dick Pics).
When are we going to stop caring about eyeballs and start caring about real profits? This appears to be another failed IPO and is eerily reminiscent of $FB IPO where it dropped 50% in a matter of weeks and everyone all but gave up on it around the mid teens only to see it climb multiples higher. I could see the former happening here, but not the latter.
Full disclosure: I do use $SNAP on pretty much a daily basis but I could easily go without using it for a while. The same could not be said for $TWTR. People get on $SNAP to send nudes and humblebrag with their stories. People get on $TWTR to read the news and check Trump tweets. People get on $FB to complain about their life and post baby pictures. People get on Instagram to look at pictures of cats and girls with big butts.
I think $SNAP is another fad and their moat is not very wide. Look at Instagram, they’ve already completely copied the disappearing message and My Story concept. It’s only a matter of time before $FB starts eating more and more into $SNAPs revenue and eyeballs as they appear to be a one trick pony. Don’t get me wrong, their growth in the past 5 years is unremarkable and extremely impressive. But without profits to back up those numbers, what do you really have?
From a Business Insider article a month ago:
Snapchat parent company Snap Inc. posted a net loss of $514.6 million in 2016, according to the initial public offering prospectus it filed on Thursday.
The company’s losses have been widening in recent quarters as Snap ramps up spending and hiring.
Snap also said that it “may never achieve or maintain profitability,” as it plans to continue investing heavily in its business.
In quick summary, I wouldn’t buy or short this thing unless you like to be a glutton for punishment. Way too unpredictable. In the long run the fundamentals will give you the fair price. The only problem is how do you read the fundamentals?
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