![]() Considering that Snapchat is nearly that big already, could get that big or bigger in five years, and has sky-high engagement rates, there is no reason this company can’t control 1% of the global digital advertising market in five years. Twitter controls about 1% of the global digital advertising market with ~225 million daily active users (if you assume a Facebook standard 0.67 daily/monthly active user ratio). Snapchat will do the same by dominating its niche of the social media landscape (quick and ephemeral messaging with edge-to-edge, visual first news updates). Twitter dominates its niche of the social media landscape - quick and combining instant news and reactions - and is gradually improving monetization rates, profitability, and overall value. Snapchat, owing to its niche focus, won’t ever get there. Those apps are too big, and quite frankly, too successful. This company neither the next Facebook nor the next Instagram. My thesis on SNAP stock is pretty simple. The positives are that that same niche focus actually enables it to remain cool (social media apps tend to lose popularity when they get too big and mom and dad join the platform), monetization rates have potential to grow with rising engagement, and losses should moderate if the user base stabilizes. The negatives are that the company’s niche focus limits user growth, monetization rates are anemic, and losses are huge. In fact, under $10, Snap looks pretty appealing, particularly if you consider the long-term growth narrative of the company.Īt its core, Snap is a social media app that is widely used and loved by young consumers everywhere. Why Snap Stock Could RallyĪlthough a buyout isn’t going to happen anytime soon, that doesn’t mean Snap stock is going to remain depressed forever. Thus, the likelihood of Google buying Snap is very, very low. Today, the dream is niche market domination. Big time, mass-market potential is a dream that faded yesterday. That once-robust user base is now under 200 million, so we are talking about a flattening out of user growth at a very small level. Namely, user growth has plateaued and actually declined last quarter. Today, though, the data has changed in a way that would keep Google from buying Snap. That potential is probably why Google offered $30 billion. It may have back in 2016, when user growth was robust and it looked like everyone was going to become a Snapchat user. ![]() Snap doesn’t fit the Google ideal of big time and mass market. YouTube is the only billion-user social media app that isn’t in China and isn’t in the Facebook, Inc. Google search is used by essentially every internet user in the world. Consider the company’s two core digital advertising properties. Google is a big time, mass market company that wants big time, mass market assets. Instead, the one reason to be excited about Snap stock is that under $10, the stock looks undervalued when you consider the company’s potential to further monetize its deeply engaged core demographic.ĭue to healthy long-term fundamentals, not buyout speculation, I think Snap stock looks interesting below $10.Īt this point in time, buyout rumors seem somewhat silly, especially from Google. Sure, there may be 99 reasons to be excited about Snap stock under $10, but a buyout isn’t one of them. Today, Snap’s market cap is just under $12 billion.Ĭandidly, any optimism regarding a buyout is misplaced. Those murmurs are corroborated by the rumor that Google reportedly offered $30 billion to acquire the company back in 2016. Specifically, there are murmurs that Alphabet Inc. (NASDAQ: GOOGL) may be interested in buying Snap. With SNAP now depressed to all-time lows, buyout rumors are starting to float around. Ever since the company went public in March 2017 at $17 per share, the general trend for SNAP stock has been down and out.īulls aren’t giving up hope. It has been a rough run for social media stock Snap Inc (NYSE: SNAP) on Wall Street.
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