Today at 12:30ET | SNAP | Bear Thesis Refresh

09/21/18 10:31AM EDT


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for access to our SNAP deck, webcast, and dial-in details.

SNAP THESIS SUMMARY

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.  However, SNAP has limited areas where it could cut costs without compromising its already-constrained ad inventory and/or advertiser demand, which in turn could accelerate the onset of revenue declines and exacerbate the cash burn its trying to control.  In short, SNAP is caught between a rock and a hard place.  

Let us know if you have any questions or would like to discuss further.

Hesham Shaaban, CFA
Managing Director


@HedgeyeInternet 

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