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Snap Inc (SNAP) Stock Has a Glimmer of Hope Against Copycat Facebook

Although Facebook is going after Snapchat in a fierce way, the battle is far from over

     

Bottom Line on SNAP Stock

Yet even if FB is successful, it will likely take several years to make a real impact. The good news for SNAP stock is that the company has some rock-solid advantages.

After all, FB cannot copy the company’s strong brand, which has attracted millions of users in the coveted 12-to-24-year-old demographic. And the engagement is off-the-charts, with 158 million active users using the app 18 times a day for 30 minutes. Consider that the word “Snapchat” has become a verb in the world’s lexicon.

Besides, the attacks from FB are certainly a lightning rod for morale across the organization for SNAP. What’s more, the battle highlights the company as a top contender in the industry. What better validation for Snapchat than to be on the hit list of FB? If anything, this gets the attention of more users as well as advertisers. Hey, who’s copying the features of companies like AOL, Yahoo! Inc. (NASDAQ:YHOO) or even Twitter Inc (NYSE:TWTR).

It’s true that SNAP stock is trading at a crazy valuation (it’s at about 50 times revenues). But this is fairly normal for early-stage companies as it takes time for the revenues to catch up with the valuation.

However, Snapchat is essentially a rare commodity — a top brand in a cutting-edge market. In other words, if the company keeps innovating and growing at a rapid clip, it seems like a good bet that SNAP stock should also rack-up the gains as well.

Tom Taulli runs the InvestorPlace blog IPO Playbook as well as OptionExercise.com, which provides interactive tools & services for employee stock options of pre/post IPO companiesFollow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/snap-inc-snap-stock-hope-against-facebook/.

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