Why Snap can't be Facebook | Snap at $17

Snap Inc., the company behind snapchat, has gone public, at $17 per share, valued at USD 24 Billion.

The question is : Is the Snap IPO price per share too high?

Snap at $17

I think Snap is more likely to follow the Twitter path than the Facebook one. At present Facebook is trading at around three times the IPO price, while the Twitter is trading at half.

I've found that apart from the revenue itself, another factor which is deciding the performance of public tech companies in US, is the growth potential. In other words, it's not necessarily the active user growth. It's something else. It's something which keeps the hopes or positive image alive. It's what is in the basket in the form of patents and acquisitions.

Today, long term investors are upbeat about Facebook, Google and Apple because they see a big basket. In simple, they are hopeful that if one revenue stream dries up; there's something to replace it. But even for them the extension of time horizon at a time is not more than 3-4 years.

From this perspective, Snap looks more like Twitter.

Thus there will be no surprise, if Snap sees a decline in coming months.


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