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.
|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 8.64% .|