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Hopes of owning a part of the next internet giant propelled Snap shares over 40% higher on its first day of trading - but investor confidence has cratered since. Snap’s maiden earnings will set the tone for investor expectations moving forward.
-Facebook has added features very similar to Snapchat stories and photo filters to its WhatsApp and Instagram apps and has the muscle to promote them with developers.
-It’s not clear Snapchat can grow beyond its niche user base. Twitter never grew beyond its devoted news junkie users.
-Snap has momentum on its side because Snapchat is wildly popular with its 18-34 year old user base.
-Augmented reality could be the next big thing in tech and Snap is well positioned in the space.
-Its young user base are remaining loyal in part because, unlike Facebook, Mum and Dad aren’t using it.
To justify its high valuation (Forward P/E ratio of 77 vs 22 for Facebook) Snap must prove it can one day join Facebook and Google in the internet advertising big leagues. To keep investors on-board Snap must maintain revenue and user growth and add innovative new features that can keep users and content creators interested.
Consensus Q1 estimates
Earnings per share: $-0.21
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. Losses can exceed deposits.
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