It’s really cold outside, I’m bored, let me play devil’s advocate…
Snap is well-positioned for a comeback.
TikTok is at a high risk of being banned by the US government, and Meta properties increasingly lack any sort of focus and coherent product management. When TikTok exits the US market, by choice or by decree, and when Meta fails to regain user trust and engagement, Snap will be the choice of the burgeoning Gen Z market.
…ow, ow, I think I hurt something in my shoulder, I was reaching so hard there. Ow.
Not a bad hypothesis, at the same time, I struggle to think of cases in social media where users / activity return to a stagnating platform. Seems there is always some new platform users migrate to, rather than going back to something “old”.
I agree. I have come to view social media and dating apps as the virtual equivalent of bars - just like bars in real life, there seems to be a trendy hotspot for five years or so that then gradually declines in popularity as new ones open up. The previous hotspot may continue on for years with a core set of users or become a local institution but will likely never be as popular as in it's heyday unless it has both a complete redesign and a rebrand turning it into a brand new bar.
If those were the only real contenders, maybe. Many young people are starting to appreciate privacy and move to ad and tracking free protocols such as Signal and Matrix. There is no money to be made on them, and they are not advertised. This slows their growth, but they are growing.
The Snap app literally destroyed my Nexus 5 phone. After installing it, the battery overheated and the screen glitched out. That was the last of that, and most social apps in general.
Not saying that you're wrong but it'll be an uphill battle for Snap.
Snap's focus on salacious content turned off a lot of my friends. People wanted something a bit more wholesome than Snap but not as sterile as Instagram. TikTok fit the bill perfectly.
Is there anything funnier than money incinerating "tech" companies' non-GAAP EBITDA? "Hey, sure we may have lost $1.5B, but look if we ignore over $1.3B of stock based compensation and a few other very real expenses, we actually made money!"
The stock-based compensation numbers are truly staggering. EBITDA/FCF measures tend to completely ignore it, making actual profitability significantly worse than non-GAAP measures imply
Q4 2022 Q4 2021
Cost of revenue 481,311 449,151
Research and development 584,942 434,195
Sales and marketing 295,150 245,228
General and administrative 225,929 194,438
Total costs and expenses 1,587,332 1,323,012
(Revenue is up 0.1%, by the way. That 2% is doing as if exchange rates had not moved.)
You can’t really look at numbers like that to paint a full picture.
Net income in particular is sensitive to one time events.
In this case, imo, it looks like the most important story is that revenue per user is falling hard. 17% more users. -15% revenue per user. Revenues are falling in North America and they have to try and make up for it by targeting the rest of the world.
FCF is a poor metric to use for RSU/option heavy tech companies.
Stock based comp directly dilutes shareholders, and using FCF hides the profitability hole that SBC creates for many of these companies.
FCF is more relevant for companies where net income adjustments are largely one time or moreso accounting gimmicky (depreciating real estate/assets to show a GAAP loss etc). SBC dilution is very real
This. SNAP has been a publicly traded company for 6 years, one cannot just ignore and hand wave away this expense, especially given how much growth prospects have deteriorated.
Stock is tanking in after hours trading so market doesn’t seem too impressed. Looks like the trap of anemic revenue growth couple with a struggle to get costs under control.
They need to stop reporting quarterly with blue chips. These guys are a couple of years from shutting down. Who the heck uses Snap? He should’ve taken the offer from Zuck and Meta stocks before the pandemic run up.
Snapchat is currently #17 of all free apps in the US. I see it much higher sometimes. If you don’t like the app, I get it. But let’s not pretend Snapchat is dead or something.
Ranking top 20 of free apps in US is hardly a barometer of future potential of a company that has never exhibited an ability to return steady profit to shareholders, and hardly bodes well for their future growth prospects.
This thread is about SNAP's financial results, and SNAP's valuation has long been dependent on future growth prospects. Ranking within the top 20 is not a good sign to that end, especially given how SNAP managed to lose $1.5B in the last year and has not put forward any credible plan on how they might make a sustainable return for shareholders.
Ah yes, the "I'm not the target audience and I don't use this product, so no one else uses it" argument.
I do agree with you though that social media is more about being "flavor of the month" and riding popular trends. In that sense, I think one trick social media companies are very risky.
However, Snap has enough inertia to last for some time.
> He should’ve taken the offer from Zuck and Meta stocks before the pandemic run up.
SNAP has outperformed FB/META basically every period since Q1 2018, though. If anything, the time to sell out was after the pandemic run-up, in Q3/Q4 2021: SNAP had gained ~365% since the beginning of 2020 versus ~85% for FB/META.
I personally find Europe only generating 2x more revenue than "rest of the world" than NA being 8x. The NA stat just seems inline with differences in GDP per capita.
>Surprising NA users are with so much more than other geos’ users.
North American (by which I mean "US", of course) users and content creators are ridiculously valuable compared to the rest of the world. Back when Trump was trying to ban TikTok in 2020, US was 50% of users but 90% of the top 50 creators.
Snap is well-positioned for a comeback.
TikTok is at a high risk of being banned by the US government, and Meta properties increasingly lack any sort of focus and coherent product management. When TikTok exits the US market, by choice or by decree, and when Meta fails to regain user trust and engagement, Snap will be the choice of the burgeoning Gen Z market.
…ow, ow, I think I hurt something in my shoulder, I was reaching so hard there. Ow.