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* Improving DAU growth – an important investor concern is the competitive landscape and whether Snapchat will be able to accelerate DAU net adds in 2017. If Snapchat is able to accelerate its pace of net adds in 2017, we believe it would do much to mitigate that investor concern, leading to improved sentiment around the name and potential multiple expansion, in addition to the direct impact it would have on fundamentals. | * Improving DAU growth – an important investor concern is the competitive landscape and whether Snapchat will be able to accelerate DAU net adds in 2017. If Snapchat is able to accelerate its pace of net adds in 2017, we believe it would do much to mitigate that investor concern, leading to improved sentiment around the name and potential multiple expansion, in addition to the direct impact it would have on fundamentals. | ||
* Outperformance on monetization – our model is highly sensitive to ARPU, given the large user base. Should Snap improve its monetization at a faster pace than we anticipate, it could reach scale and profitability sooner than we predict. | * Outperformance on monetization – our model is highly sensitive to ARPU, given the large user base. Should Snap improve its monetization at a faster pace than we anticipate, it could reach scale and profitability sooner than we predict. | ||
* Innovation – Snap has a strong history of feature and product innovation, as well as a history of quick pivoting away from features that were negatively viewed by users (such as the lens store). If Snap is able to accelerate its pace of innovation and introduce new features and products that are well received by users, or introduce new ad types that are well received by advertisers, we would expect user growth, engagement, and monetization to improve. | * Innovation – Snap has a strong history of feature and product innovation, as well as a history of quick pivoting away from features that were negatively viewed by users (such as the lens store). If Snap is able to accelerate its pace of innovation and introduce new features and products that are well received by users, or introduce new ad types that are well received by advertisers, we would expect | ||
user growth, engagement, and monetization to improve. | |||
Downside risks include: | Downside risks include: |