Too late to buy $SNAP?
Hint: Don’t let your profits disappear like your photos 👻
Awhile back I picked a few tech stocks to buy. Something funny happened with Snap. Something I knew would happen.
In short, Snap’s share price took a beating. It eventually bounced back so much you could have made a killing.
The question is, are there are more dollars to be made with $SNAP?
I generally agree with the concept of not buying shares in companies that aren’t profitable. Tech stocks are much more complicated though.
If you would have applied that same logic to Amazon, you would be out a ton of money.
Back in 2017, Twitter was trading around $14.30 a share. A friend’s dad asked me if he should buy. I said yes. Fast forward a year and Twitter was trading over $40 a share.
This was largely because Twitter is a unique player. It has no true direct competitor. Snap and Instagram compete head on. Facebook and Twitter have very different approaches to how people communicate and with whom.
Snap’s share price on December 20th 2018 was just under $5 a share. Snap has since risen above $12 a share.
Doubling your money in tech stocks is easy. Snap and Twitter are great examples of why you should either:
- Slowly invest in tech companies. When the stock tumbles, buy as much shares as you can to bring down the average price per share you paid.
- Only invest in tech companies after a big downward slide.
- Only make shorter term investments in unprofitable tech companies
The question still remains, can you make more money on $SNAP? Will the share price rise to $15 or $20 a share?
Maybe.
Snap has lost a lot of its lustre in the past two years. Users have abandoned the Snapchat app and power users have given up on the platform. Many have moved their posting habits to Instagram.
A new strategy of opening Snapchat stories to other platforms such as Tinder and expanding its advertising strategy, there is still plenty of upside for Snap.
Potential and execution are very different. When Twitter doubled its share price, Twitter executed relatively well in growing it’s advertising business.
Even if Snap ends up growing, I expect it to be a bumpy ride. If you bought north of $10 a share I’d hold Snap. If you bought in when Snap was under $6 a share I’d consider selling most of your options if you can’t deal with extended periods of volatility.
Should you buy Snap now?
If you believe in Snap’s management team then sure. If you do not trust Snap’s team to execute on it’s new growth strategy then avoid Snap at all costs.
The worst case for Snap? The end up being acquired by a large Asian play such as LINE or WeChat.
Best case scenario? Snap becomes the go preferred app people turn to for creating short video content to distribute in other apps. This turns it into an advertising powerhouse.
If Snap has not shown some serious progress by the end of this Summer, I expect investor sentiment to turn cold again.
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· Instagram sucks 💩
