Snap will finish the year with 375 million DAUs. Here are the numbers to huge upside over the next 12 months: That stock is now on fire-sale, trading more than two standard deviations below its historically “normal” sales multiple.Ī graph showing the change in Snap stock price compared to different P/E ratios The company is a strong one, with an experienced management team, a sticky product, a wide competitive moat, and a very profitable business model. Snap stock is a quintessential example of that. Snap Stock Valuation Is Dirt CheapĪcross the whole market, lots of high-quality tech stocks are going on “flash sale” right now, giving long-term investors a golden opportunity to buy amazing stocks at amazing prices. ![]() Yet, it’s priced as a no-growth firm – and that’s the last reason we love Snap stock here. Soon enough, this will be a 10%-plus revenue grower again, and likely even a 20%-plus revenue grower. In other words, Snap’s ability to sustain robust user and engagement growth amid the 2022/23 downturn positions the company to rapidly reaccelerate revenue growth rates in 2023/24 as the ad recession turns into a new ad boom. So, if Snap can maintain eyeballs (users) during this turbulent economic period, then a lot of those new ad dollars will flow into the Snap platform when the ad recession ends. That’s important because ad dollars chase eyeballs. Engagement trends remain very healthy with users spending a lot of time on the newly launched Discover and Spotlight features, as well as the redone Maps feature. Said differently, Snap’s user base continues to grow at very impressive rates. See the chart below.Ī bar graph showing the growth in SNAP daily active users Then, ad spending rebounds as the economy stabilizes. Typically, recessions and economic slowdowns cause ad spending to drop about 5% over the course of the year. In the marketing world, that means companies are slimming their ad budgets. The macroeconomic climate has deteriorated to a point where everyone is “battening down the hatches,” so to speak. And that’s the first big reason we like Snap stock at current levels. We’re in the midst of an ad recession right now, but it won’t last forever. It’s also why they’ll probably sell Snap stock at much higher prices in a year to people that think it’s “going to the moon.” That’s why intelligent investors are probably buying Snap stock today. The intelligent investor sells high to optimists and buys low from pessimists. That is, we believe Snap stock could rally 200% over the next year. ![]() Indeed, in the chaos of the 90%-plus Snap stock collapse, we see an opportunity. The company is a disaster right now.īut a 90% drop?! For a profitable firm with positive cash flows that’s still growing its user base by nearly 20% year-over-year? Let me repeat that: One of the world’s largest social media platforms has seen its stock price collapse 90% in a year. InvestorPlace - Stock Market News, Stock Advice & Trading Tips A graph depicting the change in Snap stock price
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