Snap’s shares soared 50% even though it warned ad privacy changes could hit revenue and its valuation is now somewhere in the stratosphere. jennifersaba writes that Spiegel’s outfit could come down to earth with a bump
Snap’s 42% year-over-year sales growth suggests it did a decent job of navigating Apple’s changes. Helped by its first ever quarterly profit as a public company of $23 million, investors sent Snap’s market capitalization up to about $60 billion on Friday. On the other hand Meta Platforms, which blamed Apple for a potential $10 billion hit to the top line this year, lost more than $230 billion of market value the previous day.Spiegel’s outfit could come down to earth with a bump.
In light of the competition, Snap’s valuation looks rich. Its enterprise value is more than 15 times 2024 estimated EBITDA, according to data compiled from Refinitiv, compared to Alphabet’s 11 times and Meta’s 7 times. And Spiegel lacks his peers’ biggest defensive weapon: their giant reserves of cash. Snap’s free cash flow is projected to be 7% of Meta’s two years from now, according to Refinitiv estimates. Snap investors have too many stars in their eyes.- Snap said on Feb.
- A day earlier, Meta Platform’s stock fell 26% after the company forecast weaker-than-expected first-quarter revenue. The Facebook owner also said the impact of privacy changes made by Apple could impact revenue by $10 billion in 2022.Editing by John Foley and Sharon LamReuters Breakingviews is the world's leading source of agenda-setting financial insight.
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