Snap Inc (SNAP) Stock: This Is Your Reality Check

Slogans, mottos and branding are fine, but they don't pay the bills, and they don't grow SNAP stock

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Spiegel can categorize Snap as a camera company all he wants to. He can lump it in with grocery stores or hospitals if he wants. But how he sees it is largely irrelevant to how advertisers see it. If an advertiser is weighing allocating part of a marketing budget to Facebook or Snapchat (and they are), than Snap Inc. is a social networking company.

Pretending this comparison isn’t happening where it counts — with users as well as advertisers — is alarmingly short-sighted.

Perhaps the whole camera-company angle is more to make a point than formulate a business strategy … positioning Snapchat more for PR purposes than planning. That’s fine. At the end of the day, though, sometimes you can pound the table so hard that your business decisions can become misguided because you feel they’re supposed to cleanly align with the corporate motto.

At the end of the day, it’s supposed to be about making money, and not just projecting a particular image.

Bottom Line for SNAP Stock

Don’t read too much into the observation. Snapchat has a user base of 158 million, and it did $404.5 million worth of business last year. That’s more than a lot of other companies can say about their app.

On the other hand, there’s a whole slew of companies that thought themselves to highly marketable by being unique. As it turns out, they were unique for a reason — their service or product wasn’t nearly as marketable as they suggested to investors.

Case(s) in point: The same kinds of things being said of Snapchat now were being said about Twitter, Fitbit Inc (NYSE:FIT), GoPro Inc (NASDAQ:GPRO), and a whole slew of other startups when they were still new. Consumers and users loved them, but when all was said and done, all of those companies overpromised and underdelivered.

It just feels like SNAP stock is that same trap, with clever rhetoric and rave reviews obscuring the fact the business model just isn’t all that promising.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/snap-inc-stock-this-is-your-reality-check/.

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