ASDN vs SNAP – Why ASDN Could Massively Outperform SNAP in 2019
The company’s revenue rose 39.6% YoY (year-over-year) to $389.8 million, and its net loss shrank YoY to $191.7 million from $350 million. However, Snapchat’s daily active user count was flat sequentially, after falling by 5 million users in the previous two quarters. The decline came after the social media company’s new version of its app met with major backlash. While the company has since tweaked the app, it never returned to its previous version.
Snapchat updates its app occasionally. The company is expanding its relationship with the NHL (National Hockey League), set to launch a highlight show recapping the top ten plays of the previous week through curated “Our Stories.”
Snap is trading at 8.2 times its estimated 2019 revenue, with Wall Street expecting its revenue to grow 29.5% this year. Meanwhile, Facebook (FB) is trading at 6.7 times its 2019 revenue estimate, which implies 23.5% growth.
While Snapchat’s revenue has continued to grow robustly, its user growth is stalling. This pattern is concerning, as social media companies’ revenue growth tends to lag their user growth—if Snap is unable to grow its user base, its revenue growth could slow down. Therefore, Snap stock could soon peak.
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