Snap - Revision history

46.10.149.184 at 13:14, 25 August 2023

2023-08-25T13:14:25Z

← Older revision		Revision as of 14:14, 25 August 2023
Line 26:		Line 26:
	'''Valuation'''		'''Valuation'''

	Our $27, 12-month price target is based on 18x 2018E EV/Sales, a slight premium to peers on a growth-adjusted basis, given our expectation for sustained hyper growth and potential upside risk to our estimates.		Our $9, 12-month price target is based on 18x 2018E EV/Sales, a slight premium to peers on a growth-adjusted basis, given our expectation for sustained hyper growth and potential upside risk to our estimates.

	Key risks		Key risks
Line 35:		Line 35:
	Snap is a venture stage investment in the public markets, something unseen in recent years where nearly all internet companies waited until later stages of growth and profitability to go public. This clearly carries a higher than normal risk profile – Snap generates negative gross margins, is burning more cash than it is generating revenue, and we do not expect it to break even on an adjusted EBITDA basis until 2019. The company also has an unusually concentrated voting structure, senior management with no prior C level experience, and faces significant competition from platforms like Google and Facebook that are considerably larger, more profitable and better resourced.		Snap is a venture stage investment in the public markets, something unseen in recent years where nearly all internet companies waited until later stages of growth and profitability to go public. This clearly carries a higher than normal risk profile – Snap generates negative gross margins, is burning more cash than it is generating revenue, and we do not expect it to break even on an adjusted EBITDA basis until 2019. The company also has an unusually concentrated voting structure, senior management with no prior C level experience, and faces significant competition from platforms like Google and Facebook that are considerably larger, more profitable and better resourced.

	That said, Snap has a large, valuable, and highly engaged user base that occupies a unique space in the demographic (Exhibits 7/8). That engagement generates high value advertising inventory that should allow Snap to follow the now well-worn path of mobile monetization. While the public market has no recent experience valuing an internet company at this early a stage, at this scale, we believe the opportunities from growth in users, engagement, and monetization more than offset the considerable risk inherent in what is essentially venture investing through public equity. Therefore, we initiate coverage with a Buy rating and a 12-month target of $27.		That said, Snap has a large, valuable, and highly engaged user base that occupies a unique space in the demographic (Exhibits 7/8). That engagement generates high value advertising inventory that should allow Snap to follow the now well-worn path of mobile monetization. While the public market has no recent experience valuing an internet company at this early a stage, at this scale, we believe the opportunities from growth in users, engagement, and monetization more than offset the considerable risk inherent in what is essentially venture investing through public equity. Therefore, we initiate coverage with a Buy rating and a 12-month target of $9.

	'''Key Investment issues'''		'''Key Investment issues'''
Line 52:		Line 52:

	We forecast CAGR over the next 5 years of 78% as the company monetizes its existing base of users, growing ARPU from $2.81 to $27 (Exhibit 2), and growing DAUs from 158mn to 278mn. At that scale we estimate that the company can generate gross margins of 77% and adjusted EBITDA margins of 27%. That said, given Snap’s early stage the range of outcomes over the forecast period is far wider than normal (Exhibit 14).		We forecast CAGR over the next 5 years of 78% as the company monetizes its existing base of users, growing ARPU from $2.81 to $27 (Exhibit 2), and growing DAUs from 158mn to 278mn. At that scale we estimate that the company can generate gross margins of 77% and adjusted EBITDA margins of 27%. That said, given Snap’s early stage the range of outcomes over the forecast period is far wider than normal (Exhibit 14).

	~~'''Valuation and key risks'''~~

	Our $27 12-month price target is based on 18x 2018E EV/Sales, a slight premium to peers on a growth-adjusted basis, given our expectation for sustained hyper growth and potential upside risk to our estimates.

	Key risks to our investment thesis include increased competition, volatility and unpredictability of key reported metrics like DAUs, corporate experience and execution risk given rapid expansion of workforce as well as the relative inexperience of the management
	~~team. We further explore the risks and valuation methodology beginning on page 32.~~

	==Company background==		==Company background==

>Aaronjoseph: /* Summary */

2023-08-25T00:42:50Z

Summary

← Older revision		Revision as of 01:42, 25 August 2023
Line 22:		Line 22:
	'''Catalyst'''		'''Catalyst'''

	Snap’s 158mn daily active users are highly engaged visiting the site 18 times daily for an aggregate 30 mins. While DAU growth decelerated materially in 2H16 (15mn net adds vs. 36mn in 1H16), we see early signs of reacceleration in comScore data (MAUs increased 18mn in 4Q16 vs. 12mn in 3Q16), despite increasing competition from larger social platforms. This remains the biggest risk to Snap’s future, in our opinion. Monetization. While extremely early stage, particularly in developing the critical targeting and measurement technologies expected by mobile advertisers, Snap’s high value audience and the engaging advertising inventory they create should allow the company to monetize similar to other platforms over time.		'''User Engagement:''' Snap’s 158mn daily active users are highly engaged visiting the site 18 times daily for an aggregate 30 mins. While DAU growth decelerated materially in 2H16 (15mn net adds vs. 36mn in 1H16), we see early signs of reacceleration in comScore data (MAUs increased 18mn in 4Q16 vs. 12mn in 3Q16), despite increasing competition from larger social platforms. This remains the biggest risk to Snap’s future, in our opinion. Monetization. While extremely early stage, particularly in developing the critical targeting and measurement technologies expected by mobile advertisers, Snap’s high value audience and the engaging advertising inventory they create should allow the company to monetize similar to other platforms over time.

	'''Valuation'''		'''Valuation'''
Line 29:		Line 29:

	Key risks		Key risks
	~~(-)~~ increased competition, volatility and unpredictability of key reported metrics like DAUs, execution risk given rapid expansion of workforce		include increased competition, volatility and unpredictability of key reported metrics like DAUs, execution risk given rapid expansion of workforce

	== PM Summary ==		== PM Summary ==
Line 39:		Line 39:
	'''Key Investment issues'''		'''Key Investment issues'''

	'''User growth.''' Snap’s ability to maintain and grow its audience will be the key determinant of valuation for the company, in our opinion. Currently, Snap’s 158mn daily active users are highly engaged visiting the site 18 times daily for an aggregate 25-30 mins on average. That said, user growth decelerated materially in 2H16 (Exhibits 28/29) as competitive offerings and execution issues at SNAP impacted new user additions and engagement, though we have seen early signs of reacceleration (Exhibit 11) despite competition from larger social platform intensifying. While we believe Snap’s differentiated offering of creative content that disappears after viewing (ephemeral content) by the individual or small group it is shared with encourages a frequency of casual engagement that we believe will be difficult to replicate on other platforms known for storing life’s most treasured moments and sharing them with larger more public audiences.		'''User growth:''' Snap’s ability to maintain and grow its audience will be the key determinant of valuation for the company, in our opinion. Currently, Snap’s 158mn daily active users are highly engaged visiting the site 18 times daily for an aggregate 25-30 mins on average. That said, user growth decelerated materially in 2H16 (Exhibits 28/29) as competitive offerings and execution issues at SNAP impacted new user additions and engagement, though we have seen early signs of reacceleration (Exhibit 11) despite competition from larger social platform intensifying. While we believe Snap’s differentiated offering of creative content that disappears after viewing (ephemeral content) by the individual or small group it is shared with encourages a frequency of casual engagement that we believe will be difficult to replicate on other platforms known for storing life’s most treasured moments and sharing them with larger more public audiences.

	'''Monetization.''' The path to monetizing mobile advertising inventory is well worn at this point. While Snap’s efforts are extremely early stage, most of their ad units are less than a year old, companies like Google, Facebook, and Twitter have all developed the sales channels, partnership networks, and targeting and measurement technologies Snap will need. While we don’t expect Snap to reach the level of engagement monetization that those companies have (Exhibit 12) in the near term due to differences in usage, audience, and data, we believe that Snap’s video and user endorsement based inventory will prove extremely valuable to advertisers if management can effectively build out that sale, partner, and technology ecosystem.		'''Monetization:''' The path to monetizing mobile advertising inventory is well worn at this point. While Snap’s efforts are extremely early stage, most of their ad units are less than a year old, companies like Google, Facebook, and Twitter have all developed the sales channels, partnership networks, and targeting and measurement technologies Snap will need. While we don’t expect Snap to reach the level of engagement monetization that those companies have (Exhibit 12) in the near term due to differences in usage, audience, and data, we believe that Snap’s video and user endorsement based inventory will prove extremely valuable to advertisers if management can effectively build out that sale, partner, and technology ecosystem.

	'''Competition.''' The competition for users’ time and advertiser’s dollars is intense and while the pool of both is growing, for companies growing at Snap’s and other online platforms’ rate, to maintain that pace competitive share gains are necessary. Snap has succeeded in those gains by innovating new products and seeking to differentiate its use case.		'''Competition:''' The competition for users’ time and advertiser’s dollars is intense and while the pool of both is growing, for companies growing at Snap’s and other online platforms’ rate, to maintain that pace competitive share gains are necessary. Snap has succeeded in those gains by innovating new products and seeking to differentiate its use case.

	'''Summary of fundamentals'''		'''Summary of fundamentals'''

148.252.132.152: /* PM Summary */

2023-08-25T00:41:15Z

PM Summary

← Older revision		Revision as of 01:41, 25 August 2023
Line 22:		Line 22:
	'''Catalyst'''		'''Catalyst'''

	~~User engagement.~~ Snap’s 158mn daily active users are highly engaged visiting the site 18 times daily for an aggregate 30 mins. While DAU growth decelerated materially in 2H16 (15mn net adds vs. 36mn in 1H16), we see early signs of reacceleration in comScore data (MAUs increased 18mn in 4Q16 vs. 12mn in 3Q16), despite increasing competition from larger social platforms. This remains the biggest risk to Snap’s future, in our opinion. Monetization. While extremely early stage, particularly in developing the critical targeting and measurement technologies expected by mobile advertisers, Snap’s high value audience and the engaging advertising inventory they create should allow the company to monetize similar to other platforms over time.		Snap’s 158mn daily active users are highly engaged visiting the site 18 times daily for an aggregate 30 mins. While DAU growth decelerated materially in 2H16 (15mn net adds vs. 36mn in 1H16), we see early signs of reacceleration in comScore data (MAUs increased 18mn in 4Q16 vs. 12mn in 3Q16), despite increasing competition from larger social platforms. This remains the biggest risk to Snap’s future, in our opinion. Monetization. While extremely early stage, particularly in developing the critical targeting and measurement technologies expected by mobile advertisers, Snap’s high value audience and the engaging advertising inventory they create should allow the company to monetize similar to other platforms over time.

	'''Valuation'''		'''Valuation'''

46.10.149.184 at 16:11, 24 August 2023

2023-08-24T16:11:37Z

← Older revision		Revision as of 17:11, 24 August 2023
Line 1:		Line 1:
	{{Infobox company\|company_name=Snap Inc.\|logo=-logo-\|logo_size=~~-size-~~\|former_name=Snapchat Inc.\|type=[[Public company\|Public]]\|traded_as={{Unbulleted list		{{Infobox company\|company_name=Snap Inc.\|logo=Snap Inc logo.jpg\|logo_size=\|former_name=Snapchat Inc.\|type=[[Public company\|Public]]\|traded_as={{Unbulleted list
	\| {{NYSE\|SNAP}}		\| {{NYSE\|SNAP}}
	}}\|industry={{Unbulleted list		}}\|industry={{Unbulleted list
Line 6:		Line 6:
	\| [[Consumer electronics\|Electronics]]		\| [[Consumer electronics\|Electronics]]
	\| [[Augmented reality\|Augmented reality]]		\| [[Augmented reality\|Augmented reality]]
	}}\|founded=September 16, 2011\|founders={{Unbulleted list \| [[Evan Spiegel]] \| [[Bobby Murphy]]}}\|hq_location_city=[[Santa Monica, California]]\|hq_location_country=US\|areas_served=Worldwide\|key_people=~~-key people-~~		}}\|founded=September 16, 2011\|founders={{Unbulleted list \| [[Evan Spiegel]] \| [[Bobby Murphy]]}}\|hq_location_city=[[Santa Monica, California]]\|hq_location_country=US\|areas_served=Worldwide\|key_people={{nowrap\|[[Michael Lynton]] ([[Chairman]])}}<br />{{nowrap\|[[Evan Spiegel]] ([[CEO]] & [[Director (business)\|Director]])}}<br />{{nowrap\|[[Bobby Murphy (businessman)\|Bobby Murphy]] ([[Chief technology officer\|CTO]] & Director)}}<br />{{nowrap\|Jeremi Gorman ([[Chief business officer\|CBO]])}}
	\|~~<nowiki>~~ [[Michael Lynton] (~~</nowiki>~~[[~~chairman~~]])		\|products={{plainlist\|
	\|<~~nowiki~~> [[Evan Spiegel ] (~~</nowiki>~~[[CEO ~~and~~ Director]])
	\| [[Bobby Murphy]] ([[CTO ~~and Director~~]])
	\| [[Jeremi Gorman]]([[CBO]]))
	~~<nowiki>~~}}~~</nowiki>~~\|products={{plainlist\|
	* [[Snapchat]]		* [[Snapchat]]
	* [[Bitmoji]]		* [[Bitmoji]]
	* [[Spectacles]]		* [[Spectacles]]
	* [[Looksery]]		* [[Looksery]]
	}}\|revenue=~~-revenue-~~\|operating_income=~~-operating_income-~~\|net_income=~~-net_income-~~\|assets=~~-assets-~~\|equity=~~-equity-~~\|owners=Evan Spiegel & Bobby Murphy\|num_employees=5,288\|website={{url\|https://snap.com}}\|footnotes=-footnotes-}}		}}\|revenue={{decrease}} {{US$\|4.484 billion\|link=yes}} (2023)\|operating_income={{decrease}} US$−1.492 billion (2023)\|net_income={{decrease}} US$−1.354 billion (2023)\|assets={{decrease}} US$7.666 billion (2023)\|equity={{decrease}} US$2.505 billion (2023)\|owners=Evan Spiegel & Bobby Murphy\|num_employees=5,288\|website={{url\|https://snap.com}}\|footnotes=-footnotes-}}

	==Summary==		==Summary==

>Kal.p54 at 15:16, 15 August 2023

2023-08-15T15:16:01Z

← Older revision		Revision as of 16:16, 15 August 2023
Line 6:		Line 6:
	\| [[Consumer electronics\|Electronics]]		\| [[Consumer electronics\|Electronics]]
	\| [[Augmented reality\|Augmented reality]]		\| [[Augmented reality\|Augmented reality]]
	}}\|founded=September 16, 2011\|founders={{Unbulleted list \| [[Evan Spiegel]] \| [[Bobby Murphy]]}}\|hq_location_city=[[Santa Monica, California]]\|hq_location_country=US\|areas_served=Worldwide\|key_people=~~<nowiki>{{Unbulleted list</nowiki>~~		}}\|founded=September 16, 2011\|founders={{Unbulleted list \| [[Evan Spiegel]] \| [[Bobby Murphy]]}}\|hq_location_city=[[Santa Monica, California]]\|hq_location_country=US\|areas_served=Worldwide\|key_people=-key people-
	\|<nowiki> [[Michael Lynton] (</nowiki>[[chairman]])		\|<nowiki> [[Michael Lynton] (</nowiki>[[chairman]])
	\|<nowiki> [[Evan Spiegel ] (</nowiki>[[CEO and Director]])		\|<nowiki> [[Evan Spiegel ] (</nowiki>[[CEO and Director]])

>Kal.p54 at 15:06, 15 August 2023

2023-08-15T15:06:18Z

← Older revision		Revision as of 16:06, 15 August 2023
Line 16:		Line 16:
	* [[Spectacles]]		* [[Spectacles]]
	* [[Looksery]]		* [[Looksery]]
	}}\|revenue=-revenue-\|operating_income=-operating_income-\|net_income=-net_income-\|assets=-assets-\|equity=-equity-\|owners=Evan Spiegel & Bobby Murphy\|num_employees=5,288\|website=https://snap.com~~/en-US~~\|footnotes=-footnotes-}}		}}\|revenue=-revenue-\|operating_income=-operating_income-\|net_income=-net_income-\|assets=-assets-\|equity=-equity-\|owners=Evan Spiegel & Bobby Murphy\|num_employees=5,288\|website={{url\|https://snap.com}}\|footnotes=-footnotes-}}

	==Summary==		==Summary==

>Kal.p54 at 15:05, 15 August 2023

2023-08-15T15:05:11Z

← Older revision		Revision as of 16:05, 15 August 2023
Line 16:		Line 16:
	* [[Spectacles]]		* [[Spectacles]]
	* [[Looksery]]		* [[Looksery]]
	}}\|revenue=-revenue-\|operating_income=-operating_income-\|net_income=-net_income-\|assets=-assets-\|equity=-equity-\|owners=Evan Spiegel & Bobby Murphy\|num_employees=5,288\|website=snap.com\|footnotes=-footnotes-}}		}}\|revenue=-revenue-\|operating_income=-operating_income-\|net_income=-net_income-\|assets=-assets-\|equity=-equity-\|owners=Evan Spiegel & Bobby Murphy\|num_employees=5,288\|website=https://snap.com/en-US\|footnotes=-footnotes-}}

	==Summary==		==Summary==

>Kal.p54: info box

2023-08-15T15:04:03Z

info box

← Older revision		Revision as of 16:04, 15 August 2023
Line 1:		Line 1:
			{{Infobox company\|company_name=Snap Inc.\|logo=-logo-\|logo_size=-size-\|former_name=Snapchat Inc.\|type=[[Public company\|Public]]\|traded_as={{Unbulleted list
			\| {{NYSE\|SNAP}}
			}}\|industry={{Unbulleted list
			\| [[Social media\|Social media]]
			\| [[Social network advertising\|Advertising]]
			\| [[Consumer electronics\|Electronics]]
			\| [[Augmented reality\|Augmented reality]]
			}}\|founded=September 16, 2011\|founders={{Unbulleted list \| [[Evan Spiegel]] \| [[Bobby Murphy]]}}\|hq_location_city=[[Santa Monica, California]]\|hq_location_country=US\|areas_served=Worldwide\|key_people=<nowiki>{{Unbulleted list</nowiki>
			\|<nowiki> [[Michael Lynton] (</nowiki>[[chairman]])
			\|<nowiki> [[Evan Spiegel ] (</nowiki>[[CEO and Director]])
			\| [[Bobby Murphy]] ([[CTO and Director]])
			\| [[Jeremi Gorman]]([[CBO]]))
			<nowiki>}}</nowiki>\|products={{plainlist\|
			* [[Snapchat]]
			* [[Bitmoji]]
			* [[Spectacles]]
			* [[Looksery]]
			}}\|revenue=-revenue-\|operating_income=-operating_income-\|net_income=-net_income-\|assets=-assets-\|equity=-equity-\|owners=Evan Spiegel & Bobby Murphy\|num_employees=5,288\|website=snap.com\|footnotes=-footnotes-}}

	==Summary==		==Summary==

95.149.241.133 at 18:01, 20 August 2022

2022-08-20T18:01:10Z

← Older revision		Revision as of 19:01, 20 August 2022
Line 229:		Line 229:
	[[Category:Thesis]]		[[Category:Thesis]]
	[[Category:Equities]]		[[Category:Equities]]

			__INDEX__

>Louis at 16:30, 22 July 2022

2022-07-22T16:30:06Z

← Older revision		Revision as of 17:30, 22 July 2022
Line 227:		Line 227:

	To contact Snap, click [[IR@snapchat.com\|here]].		To contact Snap, click [[IR@snapchat.com\|here]].
			[[Category:Thesis]]
			[[Category:Equities]]