$SNAP,,,A SNAP Story: The Revenge of the IPO (SNAP, FB) By Michael Kramer | May 11, 2017 — 6:00 AM EDT
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SNAP
22.98 -1.46%
FB
150.29 -0.13%
Snap Inc. (SNAP) reported revenue in the first quarter of 2017 of $149.648 million, an increase of 286% from $38.798 million y/y. According to a Reuters report, analysts had been looking for revenue of $158 million, problem number one. Problem number two, the company had a net loss of $2.208 billion, up from $104.57 million, you read that right. The company noted the net loss included $2.0 billion in stock-based compensation. The footnote adds it is primarily due to the recognition of RSUs (Restricted Stock Units) with a performance condition that was satisfying. That net loss probably wasn't a surprise to most, since the company did disclose in its prospectus at the time of the filing that stock-based compensation expense for about $1.7 billion would be incurred in the quarter of their initial public offering, found on page 26, the third bullet from the bottom of the page.
The company also noted it saw its daily active users grow to 166 million, a 5% increase from 158 million in the fourth quarter of 2016. Meanwhile, average revenue per user (ARPU) in the quarter was $0.90 a decrease of 14% from the $1.05 in the fourth quarter. We can just end it there. (For related reading, see: Snap Inc. Accused of Inflating User Numbers.)
So here's the problem, the company is supposed to be a growth company, and its user base grew by only 5%? Facebook Inc. (FB) reported it had 1.3 billion users at the end of the first quarter, and it was able to increase its global subscriber base by 4.6%. SNAP, one would think, should be able to grow its user base at a faster pace than a company 10 times its size, right? ARPU is $0.90? FB had an ARPU for the first quarter of 2017 in the U.S. and Canada of $17.07, a decline of 14% from $19.81 q/q. Worldwide ARPU for FB in the quarter was $4.23, and that was a decrease of 12.4% from $4.83. (For more, see also: Snap Inc. Rolling Out Self-Serve Ad Platform.)
Even if one backs out the $2 billion stock compensation expense in the quarter, the company would still have a loss of $208.8 million. According to YCharts, the company isn't projected to be profitable until 2019, when it is expected the company will earn $0.04 a share and revenue of $3.38 billion. At $17 per share, the company is trading with a 2019 PE ratio of 425. Analysts are looking for the company to go from this quarter's revenue of about $150 million to $1.03 billion by the end of 2017 and have a loss of $0.54 per share. The company had total revenue in 2016 of $404.8 million. SNAP is going to have to start growing that ARPU or signing up users quickly to start making money.
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FB data by YCharts
Snap is a camera company, it says so on its website. Facebook looks to help people share and stay connected. Investors in SNAP must be asking themselves what they are paying for on some fronts. First FB just reported revenue of $8 billion in the first quarter, multiple times more than SNAP. FB has cash and equivalents of about $32 billion, while SNAP has $3.2 billion. FB has a 2019 PE ratio around 18.5 based on estimates of $8.16. If you had a choice to invest in two company's A and B, where both A & B were growing at the same rate, but A had revenue multiples time more than B, A had cash multiple times more than B, and A was multiple times cheaper than B. Which one would you invest in?
Read more: A SNAP Story: The Revenge of the IPO (SNAP, FB) | Investopedia http://www.investopedia.com/news/snap-story-r...z4gm2PQlIv
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SHARE
ADD TO WATCHLIST
SNAP
22.98 -1.46%
FB
150.29 -0.13%
Snap Inc. (SNAP) reported revenue in the first quarter of 2017 of $149.648 million, an increase of 286% from $38.798 million y/y. According to a Reuters report, analysts had been looking for revenue of $158 million, problem number one. Problem number two, the company had a net loss of $2.208 billion, up from $104.57 million, you read that right. The company noted the net loss included $2.0 billion in stock-based compensation. The footnote adds it is primarily due to the recognition of RSUs (Restricted Stock Units) with a performance condition that was satisfying. That net loss probably wasn't a surprise to most, since the company did disclose in its prospectus at the time of the filing that stock-based compensation expense for about $1.7 billion would be incurred in the quarter of their initial public offering, found on page 26, the third bullet from the bottom of the page.
The company also noted it saw its daily active users grow to 166 million, a 5% increase from 158 million in the fourth quarter of 2016. Meanwhile, average revenue per user (ARPU) in the quarter was $0.90 a decrease of 14% from the $1.05 in the fourth quarter. We can just end it there. (For related reading, see: Snap Inc. Accused of Inflating User Numbers.)
So here's the problem, the company is supposed to be a growth company, and its user base grew by only 5%? Facebook Inc. (FB) reported it had 1.3 billion users at the end of the first quarter, and it was able to increase its global subscriber base by 4.6%. SNAP, one would think, should be able to grow its user base at a faster pace than a company 10 times its size, right? ARPU is $0.90? FB had an ARPU for the first quarter of 2017 in the U.S. and Canada of $17.07, a decline of 14% from $19.81 q/q. Worldwide ARPU for FB in the quarter was $4.23, and that was a decrease of 12.4% from $4.83. (For more, see also: Snap Inc. Rolling Out Self-Serve Ad Platform.)
Even if one backs out the $2 billion stock compensation expense in the quarter, the company would still have a loss of $208.8 million. According to YCharts, the company isn't projected to be profitable until 2019, when it is expected the company will earn $0.04 a share and revenue of $3.38 billion. At $17 per share, the company is trading with a 2019 PE ratio of 425. Analysts are looking for the company to go from this quarter's revenue of about $150 million to $1.03 billion by the end of 2017 and have a loss of $0.54 per share. The company had total revenue in 2016 of $404.8 million. SNAP is going to have to start growing that ARPU or signing up users quickly to start making money.
FB Chart
FB data by YCharts
Snap is a camera company, it says so on its website. Facebook looks to help people share and stay connected. Investors in SNAP must be asking themselves what they are paying for on some fronts. First FB just reported revenue of $8 billion in the first quarter, multiple times more than SNAP. FB has cash and equivalents of about $32 billion, while SNAP has $3.2 billion. FB has a 2019 PE ratio around 18.5 based on estimates of $8.16. If you had a choice to invest in two company's A and B, where both A & B were growing at the same rate, but A had revenue multiples time more than B, A had cash multiple times more than B, and A was multiple times cheaper than B. Which one would you invest in?
Read more: A SNAP Story: The Revenge of the IPO (SNAP, FB) | Investopedia http://www.investopedia.com/news/snap-story-r...z4gm2PQlIv
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'Everything works out in the end,,,If it hasn't worked out,,it's not the end'
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