6/29/2023 0 Comments Snap inc stockProfessional analysts tend to be too positive on stocks for a variety of reasons. Investment banking analysis of stocks is often inaccurate. To add insult to injury, Snap paid out a gigantic $133 million in stock-based compensation in Q1, despite the distinctive lack of revenue growth or share price appreciation that investors had hoped for. At that pace, Snap is set to blow through about a billion dollars of investors’ cash this year. Free cash flow fared even worse, dropping from -$173 million in Q1 2017 to -$268 million this time around. In Q1, the company reported its widest losses on both an EBITDA and free cash flow basis out of the past five quarters.įor a year-over-year comparison, Q1 2018 saw adjusted EBITDA slip from -$188 million to -$218 million. If anything, Snap’s profitability is getting worse. The big run comes in a name like Twitter Inc (NYSE: TWTR) once it starts guiding to profitability. That’s why I’m avoiding Spotify Technology SA (NYSE: SPOT) for now, and why Snap is also struggling. As I’ve discussed previously, social media stocks tend to underperform the market until they turn EPS positive. This company is nowhere near becoming consistently profitable. Snap’s most recent earnings report was a major fiasco for several reasons. Here’s why SNAP stock is still dangerous, even down under $11/share. While the stock has gotten a lot cheaper, Snap’s competitive position has become even worse. Just three months ago, I warned readers to “ Lock in Your Snap Inc Gains Before They Disappear.” Since then, SNAP stock has tanked from $20 to under $11 today.Įven that dramatic decline is hardly the end of Snap’s troubles, however. In fact, the next move for SNAP stock should be a trip to single digits. Unfortunately, for Snap Inc (NYSE: SNAP), don’t count on a big bounce. What happens after a stock loses half its value in just three months? Believers in the idea of reversion to the mean would suggest that the next move should be upward.
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