Be Bullish on the SNAP
Seeing lots of bullish takes on $Snap Inc(SNAP)$ post CEO comments. Here's some thoughts:
1. Zero CEO buys in the last few years. Only out of control SBC.
2. There's only so long investors can deal with weak margins.
-> $Reddit(RDDT)$ has 33% FCF margins and 45% net income margins.
-> $Snap Inc(SNAP)$ has 7.4% FCF margins and 14% net income margins.
They're the two MAIN issues amongst a few others.
The positive is if $Snap Inc(SNAP)$ and other can turn these around then the upside is pretty decent.
Say $Snap Inc(SNAP)$ can really execute and grow to ~$9.2B in revs in 2030 (just above analyst forecasts).
Then say they work towards ~30% net income margins (still far below $Reddit(RDDT)$) which would give them $2.7B in net income.
At 1.75B outstanding shares we have $1.55 EPS (analysts are forecasting $1.10).
$1.55 EPS at a historical $Reddit(RDDT)$ like multiple with a 25% discount or so would be ~26x EPS which means you're looking at a $40 stock vs a $5.50 stock today.
A lot needs to go right to get there.
Personally not a buyer right now but just purely showing you the upside potential from here IF management can execute.
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