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THESIS SUMMARY
SNAP has garnered a lot of press recently with its Chief Strategy Officer planning to leave the company. We have been revisiting our longer-term bearish thesis recently, and while some are attempting to call a bottom here, we suspect SNAP is heading down a similar road as TWTR did before it was forced to restructure. Ad inventory has always been a problem for SNAP, but now that we know that user declines are possible (regardless of the excuse), the model becomes that much more fragile as SNAP attempts to improve monetization from here. Further, it appears SNAP is starting to take steps to reign in cash burn, which we suspect will backfire as it puts already strained advertiser demand at risk. Ultimately, we believe SNAP is heading toward declining revenue growth, which we suspect we will manifest domestically first, and in turn draw more focus toward SNAP's cash burn/viability.
We will detail our thesis in more detail next Friday. Let us know if you have any questions or would like to discuss further.
