Snap Inc.$18.99(1.99%)

Make a range with 80 % certainty

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dmoney Well-calibrated. Correct 80 % of the time. 4199.01
$15 $18 forecast for 2020-02-29

The Snap Stock is extremely expensive. I expect a retraction over the next month

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dmoney Well-calibrated. Correct 80 % of the time. 4199.01 (edited)
$2 $10 forecast for 2021-12-31

The messaging/picture/video app that only people under 25 understands how works went public in early 2017. Since then they have been busy losing money. Snap has had a bumpy road, falling 75% from 22 to 5.5 and now back at 17.3. Snapchat’s user growth slowed to almost nil in 2018, but for 2019 they grew their daily active users form 186 millions to 210 millions. They have also worked more on monetisation lately and their revenue growth exceeds their user growth and they are expected to grow revenues by 25%/year for the next few years before finally maybe posting their first earnings in 2023.

Snapchat’s cash reserve of $2.3 billion might just be enough if everything goes as planned, but things seldom do, so I give it a 60% chance that they need to issue more shares to finance their losses.

The main question, as it so often is, is if Snapchat has any real moat? They definitely got network effects, but I don’t think they will be able to capture enough of the more mature people in the market in competition with Facebook in the west, and local varieties around the world. The service do have an impressive user base and can definitely be the target of a takeover, but I if that happens I belive it will be on a far lower price level.

Their valuation of 16 times sales is almost all based on future hopes and dreams and the ride is therefore likely to be rocky going forward, but downwards I think.

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