12/2/2023 0 Comments Seeking alpha snap stock price![]() And if we assume the company holds its adjusted EBITDA margins into FY23 (2% y/y growth as well), its adjusted EBITDA would be $386 million.įor a company that is no longer growing (and in the long run, in my view, risks losing users), I don't find much appeal in Snap as a value stock either. ![]() Snap has withdrawn all guidance (whether quarterly or annual) for FY23, but Wall Street consensus is expecting the company to generate just 2% y/y revenue growth to $4.71 billion. After netting off the $3.94 billion of cash and $3.74 billion of convertible debt on Snap's most recent balance sheet, the company's resulting enterprise value is $15.63 billion. Softer ad demand in the current environment is leading to a sharp decline in ARPUs.įrom a valuation perspective - at current share prices near $10, Snap trades at a market cap of $15.83 billion. Outside of its subscription revenue stream, Snapchat is heavily reliant on advertising partners, which is a very cyclical revenue stream. The company just released its AI chatbot for free, indicating that heavy R&D spending in this area may not help to diversify its revenue streams. And like many of its rivals, the current recession is prompting a pullback in this investment. Snapchat, like its social media rival Meta, has invested heavily in AI over the recent years. Investments in AI are expensive and may not yield monetary fruit.Each generation of social media users seems to latch onto a different consortium of apps, and though Snap seems stable now, it doesn't take long for a once-popular app to be relegated to distant memories. Snap simply lacks the staying power of Facebook/Instagram. Social media is subject to a fleeting, fad-oriented user base.This being said, the risk factors for this company weigh much heavier: Secondly, Snapchat management was under no illusions that it was headed for a downturn - it was relatively early in acting to reduce cost, and announced a trim-down of ~20% of its headcount last August. ![]() Snap noted that it now has 2 million of these subscribers, which translates to roughly $96 million of annualized revenue (versus ~$4.5 billion in annualized total revenue). For $4/month, this new subscription offering gives users premium features, including custom notification sounds and the ability to choose when Stories expire. First - the company has been successful at rolling out a new subscription product, Snapchat+. Now, before I get into all the reasons why to avoid this stock, I will mention two factors in the company's favor (the upside risk case, if you will). I am bearish on Snap, reversing from a prior bullish position after seeing the company's latest profitability metrics and its user trends. And though cheaper now on a relative basis than it was in the past, Snap is also carrying plenty of risk. Year to date, Snap has recovered slightly over 10% of its market value. It's being squeezed by titans like Facebook/Instagram ( META ) as well as by smaller upstarts like TikTok, and with ad dollars withering in the current recession, Snap may be facing a tough road ahead. Snap, the disappearing-chat social media company that enjoyed its heyday of popularity in the mid-2010s, has been struggling to continue growing its user base. ![]() Unfortunately for companies like Snap ( NYSE: SNAP), the current recession has a compounding impact on structural issues that existed long before the downturn even started.
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