Core Viewpoint - Snap's stock (NYSE: SNAP) saw a nearly 20% decline following its Q2 earnings report, primarily due to misses on revenue, Average Revenue Per User (ARPU), and EBITDA, leading to the conclusion that the stock is not a favorable buying opportunity at this time [2][10]. Financial Performance - Snap's current valuation is approximately $8, which is considered unappealing due to concerns over its high valuation relative to its operational performance [3]. - The company has recorded revenues of $5.6 billion over the last 12 months, with a quarterly revenue increase of 9% to $1.34 billion compared to $1.24 billion a year prior [7]. - Snap's average growth rate in revenue over the past three years is 9.4%, outperforming the S&P 500's 5.2% growth [7]. Profitability Metrics - Snap's operating income over the past four quarters was -$654 million, resulting in an operating margin of -11.6%, significantly lower than the S&P 500's 18.4% [13]. - The company's net income for the last four quarters was -$546 million, indicating a net income margin of -9.7%, compared to 12.2% for the S&P 500 [13]. - Snap's profit margins are notably lower than most firms in the Trefis coverage universe [6]. Financial Stability - Snap's balance sheet is described as robust, with total assets of $7.4 billion, including $2.9 billion in cash and cash equivalents, leading to a strong cash-to-assets ratio of 39% [8][13]. - The company's debt reached $4.2 billion, resulting in a moderate debt-to-equity ratio of 32%, compared to 23.6% for the S&P 500 [13]. Market Resilience - Snap's stock has underperformed compared to the S&P 500 during recent downturns, raising concerns about its resilience in potential future economic downturns [9][10]. - The stock has experienced a significant decline of 90.7% from its peak of $83.11 in September 2021 to $7.76 in October 2022, while the S&P 500 saw a peak-to-valley decline of 25.4% during the same period [14].
Sell SNAP Stock At $8?