REPLAY: CLICK HERE
NOTE: We believe there is an error in slide 19 and 22 of the Monetization section resulting from the accuracy of third-party data on user hours, which conflicts with metrics supplied by SNAP. We are looking for another source, but for now we can't defend our estimate in slide 22 since we suspect it could be roughly $2B more than what we had estimated based on dated metrics supplied by FB. The error isn't large enough to change our thesis, but important to flag regardless.
KEY POINTS OF DISCUSSION
- USER GROWTH: We estimate that SNAP has already captured the lion’s share of the low-hanging fruit in both North America & Europe. Incremental penetration will be tougher to come by given both structural hurdles internationally and a remaining TAM that is decidedly older; much of which FB has already penetrated. SNAP still has some runway, but growth will come at a much slower/lumpier pace.
- MONETIZATION: SNAP's limited runway user growth also means the longer-term revenue story is in question, especially since the monetization gap between SNAP and FB isn’t as nearly wide as the ARPU metrics suggest, which also means profitability isn’t a guarantee. While SNAP has real runway for near-term revenue growth, consensus is overshooting that part of the story.
- POSITION: The 1Q print confirmed much of our early thoughts on SNAP, but more importantly gave us more clarity around the trajectory of the story and timing of our catalysts, which we detail during the call.
