Guessing how long before Snap is dusted ? Falling revenues since last 6 quarters and ever declining ad revenue combined with loosing market share to TikTok. Can't raise debt because of interest rates and can't dilute stock because of stock based compensation. Seems like they have very little fuel left. How long before Snap is done and dusted?
Why do we care about stock based comp? They will dilute and some will leave
Future is uncertain, but my TC is high. So gonna do the best I can as a rank and file, and hope for the best. 🤷🏼♀️
In the current world, snap can muddle along as a mediocre company for a long time. The real challenge to them will be when a competitor enters that takes away their current market. Snap has no growth and probably won’t find any, so that’ll be the straw that breaks the camels back. But who knows when.
TikTok already ate their lunch.
It took Facebook about 5 years to make myspace a history
Correction: it took Facebook buying instagram to stay relevant.
The entire digital ad market is going through a challenging time right now and everyone in this space, including TikTok, has been laying off people. There is a lot to like in the potential for snap to recover from here. We expected revenue declines in this quarter for very specific reasons already outlined in our earnings report. We aren’t really “losing” to TikTok - DAU growth remains robust and we are cash flow positive. We don’t need a runway at all - the business is already sustainable even with offering top of market salaries for engineers. We are also actively hiring, so if you have some amount of risk tolerance, I recommend you take a look. People always say “snap is done” every time the stock goes down - but we aren’t going anywhere.
They have 4.1 billion in cash and are operationally cash flow positive. Revenues have flattened but are likely to pick up again once ad spending goes back up. Bigger concern, though, is that overall engagement has flattened. They can't afford this scenario while spending a lot of money. Unless they catch a second wind in the form of ARES, the best outcome for founders would be to sell the company when the ad market is up. The company will be fine even without an acquisition, but Snap founders are interested in running a meh company.
They also have 3.7 billion in debt. Barely ebidta positive. And their stock based compensation is massive compared to peers of similar size.
Every company has debt, but you are right about SBC. Unless they get engagement back up, the current level of SBC is untenable.