Introduction
Snap Inc. is a technology company.
Snap’s flagship product, Snapchat, is a visual messaging application that enhances your relationships with friends, family, and the world.
Snap monetizes its business primarily through advertising. Its advertising products include Snap Ads and AR Ads.
Profitability analysis
In 2023, 2022, and 2021, Snap’s revenue was $4.6 billion, $4.6 billion, and $4.12 billion, respectively.
Compared with the revenues in 2022, the revenue in 2023 was basically flat and not increase.
Compared to the revenues in 2021, the revenues in 2022 increased by 11.7%.
We believe that Snap’s revenue growth has been relatively slow over the past two years.
In 2023, 2022, and 2021, Snap’s net losses were $1.3 billion, $1.43 billion, and $490 million, respectively.
Snap has been losing money for the past three years.
In 2023, 2022, and 2021, Snap’s total costs and expenses were $6 billion, $6 billion, and $4.8 billion respectively.
Total costs and expenses remained essentially flat in 2023 ,compared with 2022.
Total costs and expenses increased by 25% in 2022, compared to 2021.
We basically believe that the growth of total costs and expenses is still relatively fast.
In 2023, 2022, and 2021, Snap’s gross profit margins are 54.3%, 60.8%, and 57.5% respectively.
We believe that Snap’s gross profit margin is also low.
Why is Snap losing so much?
Is stock compensation too much?
When I looked at the cash flow statement, it turned out to be true.
In 2023, 2022, and 2021, Snap’s stock-based compensation reached $1.32 billion, $1.38 billion, and $1.1 billion respectively.
Too much loss on the income statement is mainly due to too much stock compensation.
In 2023, total stock-based compensation expenses were $1.32 billion. This $1.3 billion includes cost of revenue ($9.5 million), research and development expenses ($890 million), sales and marketing expenses ($256 million), and general and administrative expenses. ($166 million)
Liquidity and solvency analysis
In 2023 and 2022, Snap’s total assets were $8 billion and $8 billion respectively.
There is no change in total assets.
In 2023, Snap’s current assets were $5 billion and current liabilities were $1.1 billion.
The current ratio is 4.55.
Snap’s liquidity is very ample.
In 2023, Snap’s total debt was $5.6 billion, with a debt ratio of 70%.
The debt ratio may be overestimated. Among the total liabilities, convertible senior notes were $3.5 billion, and this part of the debt may not need to be repaid.
Take another look at cash flow.
In 2023, 2022, and 2021, Snap’s net cash from operating activities was $250 million, $180 million, and $290 million.
At least Snap won’t go bankrupt. However, judging from the cash flow statement, life is not easy.
Summary
Don’t worry about bankruptcy. Overall, it is a mediocre company.
Judging from the current performance, Snap’s investment value is not great.
Disclaimer: The content is for reference only and does not constitute investment advice.