2018 Investment Series Post 5

Everyone loves payday. Just like everyone else, once I get that sweet deposit in the bank it starts burning a hole in my pocket. Before much time I am ready to blow it all on a shopping spree. My store of choice is the stock market, and I’m shopping for the best deals on companies. Here is what I dropped my $1,000 on this Friday, March 2nd.

Snap Inc. (SNAP)

The fifth pick of the Let’s Be Millionaires investment series goes to Snap Inc.

Snap Inc. is the parent company of Snapchat, a popular messaging app based on the concept of disappearing pictures. Snap Inc. also owns Bitmoji, an app that allows users to create themselves in an almost caricature-like digital form. The “snap map” feature that allows snapchatters to see the real-time locations of their friends was added after the company acquired a social mapping start up by the name of Zenly.

They may call themselves a camera company, but Snap Inc. is taking on the social media industry with a unique angle. Check out Snap Inc.

About The Stock

While Snap Inc. (SNAP) is much larger than the other companies currently present in the hail Mary portfolio it is the most recent to market. The company went public exactly one year ago today on March 2nd, 2017. The IPO (initial public offering) was priced at $17 a share for those investors who were connected enough to get a piece of the public offering before the company actually began trading on the secondary markets. The first day SNAP stock traded publicly the price rose more than 40% from the $17 IPO price up to more than $24 per share.

The story for SNAP stock over the past year has been pretty gloomy until very recently when the company posted earnings and user metrics that surprised even their skeptics. The stock now trades around its IPO price of $17 a share after rallying off of all-time lows around $12 a share.

Snap Inc does not have positive earnings so the use of P/E is not applicable here unless you want to attempt to predict positive future earnings for the company and value the stock on a forward P/E basis.

Snap Inc. can be categorized as a domestic, large-cap, tech growth stock.

The Speculation

 

Snapchat has been getting the attention of big players in the tech space for years. Back in 2013, Evan Spiegel turned down a $3 billion offer from Mark Zuckerburg and there were rumors buzzing around back in 2016 that Google was considering an offer of around $30 billion to buy the company. That’s a 10x increase in valuation in just 3 years if the rumors are true. Not only that, but maybe these companies see something in Snapchat that the market has yet to figure out considering the current market cap of Snap Inc is sitting around $20 billion.

One thing that is hilarious to me is that a tweet from Kylie Jenner about the latest update being trash (which it kinda is from a user experience perspective) sent the stock tumbling down about 10%. This occurrence works out nicely for me though since I love a good discount. However, even though many hate the new update it is pretty obvious to me that it has allowed Snapchat to push a lot more ads. The back-to-back nature of stories and intermingling of publisher stories with friend stories will likely cause users to consume much more content on the app, and by extension many more ads.

Snap Inc. has done a great job generating partnerships over the years and their revenue is approaching an impressive $1 billion. I believe that the team at Snap Inc. will find creative ways to increase partnership revenue and advertising revenue at a clip that exceeds expectations, all while expanding their user base even further.

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2018 Investment Series Post 1

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1 thought on “2018 Investment Series Post 5”

  1. Give us some updates on the old parts of the portfolio! Surely you’re keeping track of it all somewhere.

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