Much has been written about Snapchat (Ok ok, Snap Inc.) over the last 5 months. Is this another Twitter in the making? Could it get worse? Will it get acquired now that the shares are down 50% of the IPO price? etc. etc.
Like often though, things are not as simple as they seem to appear.
So before one decides to get in or get out of SNAP, here are some things to consider:
- While the user growth has been underwhelming, Snap pretty much owns the millennial market. As per Forbes, primary Snapchat users (the <25 year olds) spend more than 30 minutes on the app every day while overall daily usage of Facebook, Instagram and Messenger combined is about 50 minutes. So this is a highly engaged audience; making Snap a better place for brands to advertise to it – at least in terms of user attention. Whether Snap will be able to translate this engagement into real revenues is something that remains to be seen.
- Crowd analysts predict constantly improving revenues in future quarters – (revenue forecast below)
Also …
3. The shares of SNAP might still not be at the rock bottom. Much of the recent fall has been attributed to the end of lockup periods for early shareholders. However, lockups for many of them are still due to end, though. August will see two more end dates – 14th and 29th. Many shareholders are expected to sell at least parts of their positions, could this lead to further price falls? That could have many short-term ramifications as we all well know.
So what to do? Watch!
The earnings announcement on August 10 should be a good indicator if the above chart holds true to any extent at all.
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