What You Could Have Done With SNAP

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What I think about SnapChat.

Snap has a real tough road ahead if it wants to compete with Facebook… AND? Every advertising platform (which is exactly what Snap provides) faces a hard time versus Facebook, even Google. The point here is that SNAP can still be profitable despite the other two (FB and GOOG) taking over 60% of the market.

To be clear, Snap will never be as big as Facebook. So what?! Even building its market value from $15 to $50 billion would be impressive. If you believe it’s possible, then here’s a couple of trade ideas for this weeks earnings.

The trade idea from my newsletter…

SELL September 15 PUT @ 13.00, premium $1.35 (10.4%)

(or if you are really long-term on the company)

SELL January 19 PUT @ 13.00, premium $2.17 (16.7%)

If numbers are good, the stock could explode higher, leaving you with just 10% or 16% instead of much bigger ROI.

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Podcast Episode #022

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What to do if you win the Powerball, or if you’re the person in Illinois that won last nights Mega Millions.

Thoughts on Boston Beer

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Sales have gone from $340 to $900 million while keeping gross margins above 50%. In fact, Boston Beer has been one of the best stories of the last decade and the numbers back it up. EPS has gone from $1.53 to $6.79; book value from 9.41 to 35.72; and the price multiple remains high, just under 20x, but the growth should also remain high.

Anheuser-Busch InBev remains the leader with 42 billion in sales with Mondelez close behind with 25 billion. Boston Beer is near a 52 week low, still has a massive amount of room to grow, and has really tasty drinks.

Podcast Episode #013

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Uber’s IPO may be the first domino of the next market correction. Investors will definitely pay too much for the stock.

Podcast Episode #008

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Good Monday Morning.
A little stock market prediction
London home prices look cheap for Americans
WTF ransomeware…?!

Avoid SNAP’s IPO

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Snap (owner of SnapChat) is going public this week and with the company losing over $500 million with no outlook for profitability, it’s better to be safe than overpay. $25 billion seems to be the rough valuation at the moment, but remember this. When companies “exit” to the public markets, it’s usually at a higher valuation. Even Coca-Cola dropped 50% in its first year public. Snap is no Coca-Cola. Snap is one of 5 large social networks that lose money. Facebook is the only network that turns a profit.

Could Snap go from a $25 billion to $50 billion valuation? Sure. Irrationality is common in the stock market. The question is – what else would you buy with $25 billion? You could buy Twitter with  $13 billion left over.  Or, you could buy Whirlpool, Agrium, Citrix, or a host of others with money left over.

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