Smoke And Mirrors: How Snap And Pinterest Hide User Attrition

  1. Betting the United States will monetize higher than $9 per user – which is possible as Facebook is peaking at $26-$28 per user but all other social media platforms have hit a ceiling at $9 per user. (Facebook also uses data in questionable ways, which I’ve covered extensively from an ad-tech level, and California has numbered those days by passing laws for 2020).
  2. Betting the global audience will monetize higher

In the last quarter, the global audience contributed $17 million to revenue compared to $273 million from the United States audience. Annually, this puts the global audience at $41 million in revenue and the United States at $715 million in revenue.

Takeaway on Pinterest: On one hand, you could congratulate Pinterest on monetizing the United States users very effectively – although I am not certain how much more they can squeeze out of this audience as the user growth has stalled. I like to keep things fairly simple – if the numbers don’t add up, then I don’t invest. In this situation, the average revenue per user (ARPU) of the growing audience (global) is too low to turn a profit at 25 cents ARPU and the audience that is monetizing (United States) is stalled.

SNAP – FLAT TO DECLINING USER BASE

My thoughts on SNAP:

Snap is priced to perfection as the “largest U.S. company to have more than doubled in 2019” with a rise totaling 135% in the last six months from a low of $4.99 on December 21stto $11.75 going into earnings. The speculation around this stock is in sharp contrast to the declining user base from previous quarters in 2018.

You’ll see below that the user base has struggled to break out over 191 million daily active users and has declined to flat for three straight quarters. Meanwhile, the stock has outperformed the S&P 500 10x in the last three months. It bears mentioning the business of social media is virality and engagement, and therefore, the user base is a paramount metric.

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Kurt Benson 2 years ago Member's comment

Nicely done. This is a problem that should get more attention. $PINS $SNAP