IPO

Snapchat To Lose $2B This Year?

Looks like losing billions of dollars is a snap. Literally.

As Fortune Magazine reports, Snap, which went public last month and which has seen a spate of analyst coverage in the last several days, is on tap to lose as much as $2 billion in 2017 alone.

That sea of red ink is what has fallen out of analyst estimates, via consensus, and it comes from two dozen estimates. The top line may look peachy, said Fortune, at about $1 billion. But black ink at the bottom line is a ways off, to the tune of 2021.

Beyond the consensus, the range of estimates is staggering, with some calling for a $3 billion loss this year — higher, noted the financial publication, than even eCommerce juggernaut Amazon lost in a single year.  A close approximation might be Sears, where the financial health can be best described as moribund.

Despite the expenses weighing down the operating line, 41 percent of the analysts (which number 29) rate the company a buy. The reasons may be manifest, if less than quantitative; for example, Morgan Stanley’s Brian Nowak, the analyst covering the name, stated that the stock trades on “different visions” of what the earnings power might be. And even absent a loss that will come in 2017 on the heels of stock comps and millions — make that hundreds of millions — of dollars paid out as rewards for taking the firm public, no one seems to know just how net income will become net income.

Other expenses may be sticky ones, such as outsourcing technology and hiring staff. And it will take both time and leverage for the firm to grow into any type of sales multiple and avoid having to tap the markets again for fresh capital. The current multiple is 26 times the expected 2017 sales — rich by any standards.

——————————–

Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

Click to comment

TRENDING RIGHT NOW

To Top