It is best for this Year

It is best for this Year

Social media company Snap (NYSE:SNAPon Wall Street. Then, seemingly overnight, Snap stock has become Wall Street favorite.

Snap Stock

Source: Shutterstock

From Christmas Eve 2018 to today, SNAP stock has been gone by overwhelmingly bearish.

Why the change? Mature positive material materialized in early 2019 and have continued over the past several months. And developments.

The important social media platform alongside Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR).

In the long run.

SNAP stock rebound?

No. Sure, the fundamentals here are improving. SNAP stock is pretty well priced because its multi-year growth prospects.

Is not warranted on SNAP stock forward forward. Rally. T

Three Potential Long Term Outcomes for Snap

In the ship * Results.

Number One: Bear Case (flat user growth, pedestrian ARPU growth, Twitter-like profitability)

The Android reboot app to re-accelerate international user growth. Instagram continues to be the social video sharing market. Snap's user base plateaus around 200 million daily active users.

Quarterly ARPU climbs ~ 15% by 2025. Gross margins towards Twitter-like 70% levels. The opex rate falls towards Twitter-like 50% levels. EPS settles around $ 0.50 by 2025.

Number two: Base Case t

The Android reboot app re-accelerates international growth. But, Instagram global user growth growth growth growth growth growth growth growth growth growth growth growth growth growth growth growth growth growth growth growth growth growth.

Snap adds about 5 million new users per user. Daily active users measure around 230 million by 2025. Quarterly. Gross margins towards Twitter-like 70% levels.

The opex rate falls with scale towards Facebook-like 40% level. Paras listed above, equates to $ 15 price target.

Number Three: Bull Case (healthy user growth, robust ARPU growth, Facebook-like profitability)

The Android reboot app re-accelerates international growth. Gaming, shopping, Snap adds around 10 million new users every year. The user base measures 250 million daily actives by 2025.

Quarterly ARPU skyrockets alongside robust user growth. Twitter and Facebook levels). Towards Facebook-like 80% levels. The opex rate drops to 40%. EPS settles around $ 1.60, equating to a $ 25 price target given the same parameters.

The Current Valuation Is not a Steal

Is a great range. The aforementioned 3 months ago $ 8 and $ 25. Potential outcome.

Given recent positive developments, (around 8% likelihood).

The bull case ($ 25 price target) t

Realistically, the price of materializing.

Now, let's do some math. We have a 10% likelihood associated with the $ 8 price target, and 10% likelihood associated with a $ 20 price target, and the 80% chance associated with a $ 15 price target. Summing all that up, a reasonable probability-adjusted 2019 price target for SNAP stock is around $ 15.

Bottom Line on SNAP Stock

Things are undeniably improving for Snap. But, they are not the best. T

As such, unless you are a user, the best view of the SNAP stock rally, the best of the 2019 SNAP stock rally.

As of this writing, Luke Lango was ship FB and TWTR.

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