Today's stock - Snap Inc. (SNAP)

SNAPCHAT, or Snap Inc. opened for public trading on NYSE on Thursday 2nd March 2017. Its IPO was priced at $17, but opened at whopping 42% increase at ~$24. For the second day in a row, it has been skyrocketing, thanks to the general confusion and hype.
Should you or should you not buy it at this value is the question.
Snapchat is a company built on the foundation of social messaging, and the difference they bring are their ephemeral messages and photos and videos, which has bought them their amazing user base.
However, the company stock rise for me seems just as ephemeral as their messages.
The reasons are:
  • The company isn’t profitable. Even today, it continues to lose around $500 million per year, so they need to come up with ways to generate revenue soon, now that they have gone public.
  • The company has one product. The day it dies (like an Orkut or a MySpace), the company will have no other revenue generating product to turn to.
  • The company is overvalued. It P/E compared to other social media companies doesn’t even stand a chance.

(source: yahoo finance)
There is hope for it too. Back in the day when Facebook went public, it saw a similar increase in the first few days, followed by a fall. Today however, it has risen back up, and has outperformed most companies to become one of the leading companies in the world. They are coming up with more products, and have consistently surpassed expectations in revenue, profits and user base.

Snapchat too has a great user-base. The thing it will be judged on initially is that they continue to increase their user base, and that they continue finding ways to generate revenue. I am not saying that it is impossible, but it is certainly tough.

Long story short, before the first earnings are out, it will be highly volatile. Analysts will continue upgrading and downgrading based on hype, but numbers don’t lie, and those will only be available after the first quarter.
Time will tell whether Snapchat snaps or not.

If you want to invest, invest with a tight stop loss, and don’t invest more than what you can lose. It will continue its up and down swing for the coming three months based on news and hype. Be on the look out for news and capitalize when there’s a chance.

 Let's take a look at our portfolio. Not the best eh? But then, we do have time till July.


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