Snap Story

Snap -- USA Stock  

USD 15.63  0.09  0.58%

Macroaxis News
  
By Nathan Young

Snap Inc., the name responsible for the social media platform Snapchat is in trouble as their latest numbers were below estimates and this has investors looking the other way. For those unfamiliar, this social platform works by sending images that eventually disappear. You can even post Snapchat stories that stay posted for 24 hours for your friends to see. These features have been mirrored on Instagram and Facebook, which Facebook owns Instagram, but many say that is not the reason for their issues with Snap Inc.

Business Services
Fama & French Classification
Snap Inc. Is in Trouble as Investment Banks Are Throwing in the Towel

From the Q1 numbers to the latest Q3 numbers, revenue has increased from $149.64M to $207.93M. However, their EBITDA has run negative all year, starting at negative $2.2B in Q1 of 2017. Looking more broadly, EBITDA has worsened year over year as well. When the stock went public, there was a genuine statement made that the company may never become profitable. As an investor, that alone should make you come to a standstill and question this as an investment option.




Facebook and Twitter would be close competitors as they are attempting to capture the attention of millions. The struggle for Snapchat comes in with trying to monetize the platform, which many believe is still going to be difficult. Another distinguishing factor is Facebook appears to a broader range of people and Snapchat has a younger demographic.  

From a technical view, the stock is fairly new but has done nothing but sink like a rock. Really, this is due to the fundamental issues at hand. Becoming profitable must be a priority for the company because many believe they are unable to appeal to the marketing community as favorably as Facebook or Instagram.  

On the Brightside, the company has been able to increase revenue from $58.66M in 2015 to $404.48M in 2016, indicating they have the ability to generate more income. But as previously stated, their EBITDA continues to lack, indicating there are deeper underlying issues.  

What does this mean to an investor? It means that Snap Inc. may not be the best investment right now. They are very new to the market and need to get a grasp on turning better profits. The worries of Wall Street are certainly valid and should concern investors. With competition such as Facebook and Instagram, they have an uphill battle. What we should be keeping an eye out for would be the ability to bring more marketing dollars spent on their platform and increase daily active users. Also, appealing to more people and making the app even more user friendly will help that process of attracting more marketing dollars.  

Snap Inc. certainly has the potential but that doesn’t make it a guarantee. Look at Twitter as an example of the struggle. They continue to hold on but for those active in the market, Snapchat feels an awful like Twitter from a quick glance.

Story Momentum

This media report from Macroaxis distributed on November 9, 2017 was a factor to the next trading day price appreciation.The trading price change against the next closing price was 3.07% . The trading price change when the story was published against the current closing price is 25.28% .

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EBITDA

EBITDA Comparative Analysis
  EBITDA 
      Snap Comparables 
Snap is currently under evaluation in ebitda category among related companies. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is a measure of a company operating cash flow based on data from the company income statement and is a very good way to compare companies within industries or across different sectors. However, unlike Operating Cash Flow, EBITDA does not include the effects of changes in working capital.
Also please take a look at Snap Hype Analysis, Snap Correlation and Snap Performance. Please also try Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.