Monday, November 5, 2018

Snap: Death Spiral

Snap reported another quarter of declining users.
Industry surveys continue to show Instagram successfully take market share and killing all momentum in Snapchat.
The company is burning far too much cash to play any turnaround story.
The quarterly results for Snap (SNAP) were so bad that my recently issued price target of $5 now appears aggressive. The original story of out-of-control spending has been replaced by active user declines. The social-messaging platform won't have a rewarding future based on projected user declines.
Read the full article on Seeking Alpha.

Update 11/15
Don't place a lot of thought into the DOJ and SEC subpoenas regarding the IPO. The company disclosed the large cash flow losses that are leading to the problems with stock now. Shareholders in the lawsuits against the company apparently can't read a prospectus. Regardless, the stock should still head below $5.
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