Snap Inc (NYSE: SNAP)
Shares of SNAP wasn't in the chatting mood on Thursday, as it saw its shares tumble by over 21% during the regular session. The after-hours trading session provided a reprieve by taking back about eleven cents of the $4.93 shellacking on the day.
Some Snap, Some Chat, And Some Tweet
With the assumption that people do still like to communicate, companies are not weary of bringing to market a flavor of the month that intends to capitalize on the notion that people still are a sociable animal. Despite the mixed messages I get from my teenage children on the matter, let's assume that people do have an intense passion for finding more innovative ways to communicate via smartphone, computer or fablet.
Assuming that the statement is true than SNAP needs to come up with a more valid reason for losing $2.2 billion dollars during its first quarter as a publicly traded company. The loss flattens the total revenue number by fourfold and may find itself as the leader in the pack by losing more money in the space at a faster clip than any of its competitors.
Is It Fake News?
Oh, has Fake News reared its ugly head again, this time masking the over $2 billion in stock-based compensation recorded as a loss due to the company's IPO? Perhaps, but the cover is only as good as the rest of the numbers dictate, and if an Elon Musk type smokescreen can be applied in SNAP's defense, then more power to them.
Despite the accounting gimmicks and legal maneuvering, SNAP still lost a considerable amount of money. At current prices, don't get fooled into thinking that the share price offers a buying opportunity just yet, either. SNAP has provided no guidance for future operations, leaving a void in expectation. And if there is one thing that investors hate, it's uncertainty.
So, for those of you that are waiting for a pullback before buying shares, take your time. Pay less attention to the bankers that brought the company public, who would likely sell their first born King Charles Spaniel instead of put out a negative report on SNAP. Trusting them would be about as nifty as trying to beat that gout-laden leader of North Korea in a game of one-on-one basketball. Chances are you can win, but in the end, well you may be the guiding point on the tip of the next failed missile.
No, for SNAP, investors should take a wait and see approach. That is, wait and see if they ever make a penny. Until then, shop elsewhere...but do it quickly because the retail stores may be closing their doors quicker than SNAP.
Oh, Soulstring, say it ain't so.
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