SNAP - Embedded Expectations Analysis - 2021 08 23
Snap Inc. (SNAP:USA) currently trades at a historical high relative to Uniform assets, with a 31.8x Uniform P/B. At these levels, the market has bullish expectations for the firm, but management may have concerns about their advertising performance, Snap Map monetization, and progress on augmented reality (AR) shopping.Specifically, management may lack confidence in their ability to maintain higher eCPM
and higher cost per action for their goal-based bidding products, capitalize on their strong community growth, and build the right content products. Also, they may be concerned about the impact of mobility restrictions on daily story posting activity, higher operating expenses, as well as increases in full-time headcount costs stemming from recent acquisitions. Furthermore, they may have concerns about Snap Map monetization, the Creator Fund initiative progress, and ongoing technical challenges regarding AR shopping. Moreover, they may lack confidence in their ability to continue investing in the Spotlight launch and use adjusted EBITDA leverage to further invest into the business. Finally, they may be concerned about their stock-based compensation strategy and the repercussions of the changes to the new iOS platform.
Snap is a camera company. The company's primary product, Snapchat, is a camera application that helps people to communicate visually through short videos and images called Snaps. The company's products are: Camera, which includes tools for people to personalize their Snaps; Chat, which includes interacting with friends on Snapchat; Discover, which includes providing Stories and Shows from publishers, creators, and the community; Snap Map, which shows a live map of the user's location; Memories, which enables users to save the Snaps they create in a personal collection called Memories; and Spectacles, which includes creating Memories by using Spectacles, which are the company's sunglasses that make Snaps.
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