Snapchat, Snap Inc. ould I Buy Snapchat Stock?| Snapchat Stock Analysis
The key highlights the streams of income, the risk factors competitive advantage, my personal insight and whether i think snap is a buy, but before we get started, make sure you smash the like button because it helps youtube algorithm. It helps youtube know that this is positive content and help my videos reach a broader audience and also, if youre, a big fan of finance and investing make sure you check out my store wall street stock of pearl, where i make custom finance and investing t shirts And also, let me know whether you, like the format of me being on the webcam on the side versus me sitting in the chair, make sure you let me know in the comments below which one you like better but lets get into it. So snap, or originally it was known as snapchat on the companys website. They call us a camera company now, dont think kodak or canon or nikon. I hope i pronounced that right, dont think uh, kodak or like digital cameras or something like that. No, all of their camera technology is embedded in their app so, like i said, they believe that theyre trying to reinvent the camera experience to create a better interaction when they communicate with people. So their overall goal is. We believe that reinventing the camera represents the greatest opportunity to improve the way people live and communicate. So snapchat is an app that allows people to communicate and share images and experience through the app all through your phone.
One of the key features is you can end up sending messages to your family and friends for a short period of time. So maybe they only can view it for 10 seconds or minutes, so that was kind of something that was new about snapchat. But enough of that lets get to the key highlights. So snap right now has 293 million daily active users. They have over 200 million daily active users engaged in augmented reality ill go over that a little bit later. They have almost 200 000 lens creator. Anytime people make videos and stuff on it, thats what they call link creators and they have 75 of people in the us from 13 to 34. The population use snapchat. So these are interesting numbers that i just wanted to share. Okay, so if were looking at the growth as far as daily active users, once again, these are in millions, as you can see, for north american europe and the rest of the world, it has been increasing nicely so thats something you would definitely like to see ill. Get into the stream to incoming exactly why this is important. A little later now also lets look at the innovation that they made over the nine years, as you can see there. As far as the application and the technology that theyre kind of using to improve your camera experience, they have a lot of things. They have the story. Api lens map layers sounds like, so they have been innovating since they was initially lost in 2011.
and lets look at the key features that the app put together. So i definitely wanted to clarify this. So snap is the actual company. Snapchat is actually a product that the company produce, but just know that all the technology and all the value is pretty much based off of snapchat, so thats. Why? In the video i said, snapchat stock analysis, because all that technology, all the business model drops from this particular app, so they have the app has five key components. The map, which allows you to interact with your friends and know the location communication was like a simple messaging app as soon as the app open up it opens up in the camera. So you can easily create a moment and then just send it to your friends and family or whatever they also have. The stories stories is kind of allow you to put the highlights of your day or something so your family and friends can see it. A lot of people may be familiar this um, because facebook and instagram kind of stole like the whole storys concept, and then they also have spotlight, which just works similar to tick tock. I think they kind of copied off of tick tocks, so no shade. So lets go over the business model, so the business model is currently 99 of their revenue come from ads. So this is a key component when they say a company, a camera company where pretty much the whole business model is based off of people using the platform and the ads generate the money, not actually the camera technology so thats, something that you want to definitely keep In mind, that ads is pretty much what drives the income, which makes it more of a social media platform, because the more people that go on your platform, the more businesses, will pay for ads the more expensive the ads can end up getting and the more money They would end up um obtaining.
I also wanted to let you know, let you be familiar with the companies that they have did mergers or acquisitions, they even purchased it or they either joined up. Okay, so lets check out their risk factors, so they got a lot of respect. So one of the risk factors is the advertisement. Business is very competitive. You have the facebook, the google, the pinterest tick tock, so all of these business models are based for ads. So any type of social media platform, the whoever has the most people – is normally end up being a lot a lot more successful. So you have that another thing is they have a lot they partner with google app on amazon? This plays a key role in providing mobile operating systems for application, so theyre really relying on some big players and also keep in mind that google makes a lot of their money from ads as well. So that could be a conflict of interest or some type of problem if they got too successful that they end up having or they end up mentioning that i thought it was important. So we rely on google cloud and avenue web services for the vast majority of computing storage and other services, so theyre really relying heavily on these big tech firms thats out there, of course, any type of hacks and by the way they have a long list. I think their risk factors go. I mean the first section goes from like 43 to like 71.
, its like super long. So if you guys were investing in this company, so make sure you check out the risk factors as far as the earnings and stuff it may fluctuate, so it may be difficult to be predictable as far as earnings, the cost may increase at a faster rate than Theyre able to innovate so they they mention a lot of different um things regarding that all right. So enough of that lets jump into the financials and see how that financial is doing im on uh simply wall street. Sometimes i like to do this because its a fast and easy way to just kind of review the financials okay lets see how the stock price has been doing max company is only been public since 2017. As you can see, it was kind of just pretty much steady and too cold. It happened and then you seen a huge increase from nine dollars to 72. That is a major game right there. So kovit they really benefited a lot from colbit. As you can see, the one year return is 661 percent. That is awesome compared to the industry, which is 57.8 percent even the market, so snap has been crushing it as far as returns anyway, volatility as we can see, it is a little bit more volatile than the industry, but its relatively new company, so thats what you Expect lets look at the evaluation section, which kind of basically based a companys value off of projected cash flows, and then they end up setting it back to future value um.
This is called a complicated process, but its pretty much coming out with the company with the company should be valued today, based off of future cash flow, has a whole channel for discounted cash flow. How to make it he does it for pretty much every single company. So make sure you check that out, as you can see, i wouldnt worry about the price to book for this one, but the value of the stock as far from the discounted cash flow, they send its a little bit of overvalue based off of the cash flow Which is 75 versus the fair value which is 55 and also most of the time, as you can see, all of these are read simply because most of these metrics is based off of earnings, so thats exactly why you end up seeing that theyre not profitable. Now, like i said, ill skip all these price to earnings price ill, pretty much skip all that, but, as you can see, the future growth nice future girl. Analysts can be wrong, but 34 analysts in the next one to three years projected to grow 71.3 in earnings. So that is really good. The revenue has been increasing steadily. The earnings have been increasing slowly but, like i said, theyre not projected to be profitable into the projections to probably 2023. still. You have a negative free cash flow, which is mean more money is going out than coming in. It looks like maybe in 2022 theyll be able to produce a positive cash flow, as we went out for earnings its 71.
3 percent and for annual revenue is 33.2, which is always good when you beat the industry in the market, but its also good. To mention that, of course, their earnings will be much higher because theyre losing money, so the less money theyre losing the higher percentage. It would end up going. So, even though the earnings increased from 70 71.3 percent, there still would be losing money just at a slower rate and for the lets go the financial health. So the financial health to me seems relatively decent, not perfect, but it seems decent assets cover of short term and long term liabilities. I would actually like to see the assets for the short term switched with the long term. Also. I would end up showing the amount of cash that they particularly have so their balance their on financials is pretty solid, its covered. This is the amount of equity. As you can see, the debt has been climbing up there lately since the pandemic and thats. What uh simple simply wall street was identifying, but if you look at the cash, the cash has increased dramatically so its giving them more than enough um. If they really wanted to pay off the debt, they can so, in my opinion, theyre kind of using debt as leverage with the low interest rates thats. Just what i personally think thats why i wouldnt worry too much about it, see a lot of inside trading going on here so thats interesting to keep in mind, i just kind of pay attention to that.
A lot of inside trading there, especially zero to three months. Three to six months, a lot of inside trading. So to me i just got it thats kind of a red flag right there. Now as far as the ownership, so we see institutions got about 53 percent. Individual inside investors have 24. So this is really critical, because weve seen a lot of inside selling there so keep in mind that inside the inside investors has 24.1 thats a good amount. The general public has 22.2, so it has been relatively um. You know versatile, but institutions as to 53. It would be the key movers as well as insiders lets check out yahoo and, as you can see, this is yahoo. Sometimes i just refer to different platforms, just to kind of get an idea of how their setup is kind of different, and some information is easy. Its better to see on different type of platforms like this one, when i just want to see how they the earnings have been lately. I just go to here, so you can see they have been beating earnings consistently for four quarters and im, hoping that theyll be able to do the same as we look at for the quarterly, as we can see. As far as earnings has been inconsistent, they had um, they lost some, i mean well, they have been losing, but sometimes its been much more than others early on. They were saying they kind of fluctuate, so its hot and hard to be predictable.
So this is justifiable. Okay – and this is just an add on so as you can see – the revenue has been increasing. Sometimes this may be easier to view. Cost of revenue has been increasing as well. Gross profit has been increasing on the upside research and development for growth stocks. I really pay attention to that. I would like to see a lot of money put in that way, and this is the income. Of course. We know that theyre, you know not making money operating expense as well and one of the things i kind of really want to point out to the companys evaluation, which is at 118 billion dollars, so their their evaluation is at 118 billion dollars, theyre losing money and They also only have a revenue of about 2.5 billion dollars and we talk about total sales for so from a validation perspective. This would very suggest that youre paying a premium and youre banking that the revenue will grow very quickly because right now, theyre 118 billion dollar company and their only total sales is 2 billion. See i like to look at what different analysts are seeing so for the because, because this is a growth stock, um sales growth is really going to dictate it. So from the current year, 67 percent um for the next year. They have for 2022 theyre projected for this particular year 46, which is really solid. As we look at the recommendation from yahoo finance, they have the target price its 85.
I dont put too much emphasis on it. I dont really trust other people. I just dont. Take the word i kind of based off of my own research. Now, as we also look at um, this is seeking alpha looking at some of the competitors where you can kind of prepare other competition, as you can see from the valuation perspective, so the price the sales is 32, so thats kind of thats relatively high. Look at all the other ones, so you can think of price to sales like this, for every 32 dollars worth for sales, you would make one dollar to let you know how much value youre getting twitter. Um. 11 pinterest is 14. So, as far as the amount of that youre getting for the stock price based off of the revenue, its pretty high. But my overall opinion, whether i think snapchat isnt by me personally, im not a big fan of snapchat. Because my make, like i said mo, their business model is based off the ads and im willing to bet on facebook, pinterest, google, as far as dominating that industry. So the fact that they only have one stream of income is simply based off the ads which for me, why i wouldnt buy. In addition, as we looked at some of the risk factors theyre actually depending on a lot of key players as well. So for me, as far as snap as the company overall, i think, theyre a cool company, but as far as an investment for me, i think theres other um, better alternative and im, not as far as the the business model or something im not too keen on It but, like i said, if youre trading off of, if youre buying off of other stuff, like momentum or technical technical analysis, you may look at this different, but from a value perspective on business operations to me it seems a bit pricey.
But that concludes this video.