I Was Wrong About Snap Stock in 2022. Here's How I See It Now.

Core Insights - The article discusses the lessons learned from underestimating the severity of the 2022 bear market, particularly regarding Snap, Inc.'s stock performance and the broader implications for investors [1][2]. Group 1: Market Conditions and Stock Performance - The 2022 bear market was underestimated, leading to poor investment decisions, particularly in stocks that had already lost significant value [2][3]. - Snap, Inc. experienced a decline of approximately 65% in stock value since a bullish call was made in April 2022, making it unlikely to outperform the S&P 500 by April 2027 [1][4]. - The advertising revenue decline during the bear market negatively impacted Snap, as major competitors like Alphabet reported only single-digit increases in ad revenue [3][5]. Group 2: Financial Metrics and Comparisons - Snap's revenue for the first half of 2024 was reported at $2.4 billion, only slightly above the $2.2 billion earned in the same period in 2022 [5]. - Despite a relatively small market cap of $15 billion, Snap's revenue growth of 12% over two years pales in comparison to Meta's 35% growth during the same timeframe [5][6]. - Snap's price-to-sales (P/S) ratio of 3 is near all-time lows, while Meta's P/S ratio stands at 9, indicating a potential valuation edge for Snap [5][6]. Group 3: Strategic Lessons - Investors should recognize the difficulty in predicting market bottoms, as the timing of recovery can be unpredictable [6]. - The performance of Snap in a downturn was not adequately considered, particularly its inability to compete with Meta in the social media space, which led to faster negative impacts and slower recovery [6]. - Until Snap can accelerate its revenue growth, it may be more prudent for investors to take speculative positions rather than making bullish calls [6].