Snap Inc, the firm producing the Snapchat application, is currently valued at approximately 65 billion USD.
In my opinion, the intrinsic value of Snap is 270 billion USD. And this is independent of the stock market environment. The US stock market, the Nasdaq Composite Index and technology stocks in general have endured a significant correction in their market capitalisations.
Many analysts express doubts that many currently unprofitable technology companies will survive the current technology stocks rout mainly because the Federal Reserve is firmly intent on embarking on an aggressive Federal Funds Rate hiking cycle, so as to stave off the high inflation America and many other countries are enduring at the moment. What is more, the Federal Reserve could soon taper off its bond buying and even start selling its bond holdings.
Raising the interest rate levels and withdrawing liquidity from the capital markets by the Federal Reserve will make it much harder for technology and biotechnology startups to finance their businesses which are usually unprofitable, at least in the initial years. Partly because of the bettter risk/reward payoff of buying the higher yielding US Treasuries.
All these developments are currently decreasing the value of almost all technology stocks. Snap is no exception with Snap's stock price falling more than 50 % from its recent peak.
However, social networks are the modern way of communicating. Videos is the main new mega trend of consuming content, because you learn so much in a few minutes and the effort is not enormous.
Snap is riding both the social networking and the video wave. And I am convinced there is room for one or two more leading social networks, aside Facebook. In addition, Meta, the company owner of Facebook is having image problems and issues with regulators which are threatening to break up Facebook. All these problems are weakening Meta/Facebooks's competitive position. Yes Meta has huge cash resources, but it recently said it expects to suffer a 10 billion USD revenue hit this year, after Apple's privacy protection changes.
So Snap's comparatively low market capitalisation, its innovation edge in social media and videos, Meta's regulatory problems and the young user demographic of Snap explain my estimate that Snap is worth 270 billion USD.
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