EC Snap Fails To Generate Interest And Value

Above all, it continues to invest in its hardware business. After launching Spectacles earlier, it is now working on a new version of the sunglasses with built-in cameras that could include augmented reality. Analsyts expect that the new glasses will come with sensors to determine a user’s location and will be able to overlay graphics, such as lenses and geo-filters onto the space around them.

The market isn’t too pleased with Snap though. Its stock is currently trading at $17.88 with a market capitalization of $21 billion. It had peaked to $29.44 soon after listing at $17 in March. The stock had fallen to a low of $17.56 soon after the result announcement. It appears to be barely managing to stay above its list price. Snap’s stock has not been helped by the fact that recently Citi Research downgraded the stock to neutral from buy earlier this month due to modest user growth expectations.

Prior to listing, Snap had raised $2.65 billion in funding from investors including Alibaba, General Atlantic, GSV Capital, Fidelity Investments, Glade Brook Capital Partners, York Capital Management, August Capital, Yahoo!, GIC, Kleiner Perkins Caufield & Byers, Coatue Management, Tencent, SV Angel, Benchmark, General Catalyst Partners, Institutional Venture Partners (IVP), Lightspeed Venture Partners, and Lone Pine Capital. Its last round of private funding was held in May 2016 when it raised $1.8 billion at a valuation of $20 billion.

There is a lot more grief ahead for Snap, as Facebook doubles down with superior execution. I would put a SELL rating on this stock in glaring neon signs.

(Click on image to enlarge)

1 2 3
View single page >> |

Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.
Adem Tumerkan 3 years ago Contributor's comment

Great article and Agree