Is Snap, Inc Overvalued? Is SnapChat a Fad? 🤑

Snapchat is on everybody's lips at the moment - it is the biggest IPO since Alibaba. If you found value in watching this video, PLEASE LIKE AND SHARE so we can do more! The company has recently renamed itself to Snap, Inc. Snap Inc and announched the launch of their first hardware product Snapchat Spectacles. Is Snap, Inc really worth a $25 billion dollar valuation? Snap: A Camera Company? I don't see Snap as a camera company since it doesn't sell cameras or make money off photos; it is more of an advertising business. What makes the app stand out is that you can share photos or videos with your circle which would disappear a few seconds after people viewed them. What is Snapchat? Essentially it is an app that permits you to upload photos. You take a photo, you upload it and it self-deletes after a few seconds. I'm not sure how they can call themselves a camera company - they aren't really reinventing the camera! In 2013, when Facebook offered $3 billion to buy Snap but Evan Spiegel and Bobby Murphy, Snap's founders, turned down the offer at the time and I'm sure there were many who looked at them as insane since Snap was encountering difficulties attracting advertisers and had little to show in revenues at the time. Snap Inc (formerly Snapchat) Spectacles is a $130 (retail) pair of glasses (sunglasses) with a camera video recoding system that creates 10 second of live video and pictures (all models) to an iOS or Android device via Bluetooth into the Snapchat app. Snap Inc from a fundamental perspective is overvalued but it is a dangerous stock to short. Two things can happen with an overvalued stock. The valuation is likely to decrease in time and that's where your short will come in. I always urge you to download this thing and see what it is all about. Cons of SnapChat: There are several problems as far as shareholders are concerned. Snapchat sold 200 million shares at its IPO. But there are another 21 million shares that are going to be added in future years at a price of $2.33 (lol), plus 18 million at very low prices, plus 1.2 million at $1 (lol?), plus 119 million shares under another plan, plus 355 million under the 2017 equity plan (which they presumably created just before the IPO), plus 16 million under employee purchase plan, plus 2.5 million, plus 13 million...do you see the problem here? 200M shares were sold at IPO, plus a possible 30M. But hundreds and hundreds of millions of shares are about to flood the market. So even if SnapChat manages to succeed any profits will be heavily diluted by the free/cheap shares above. Also, shareholders don't get to vote on the company's future, the founders decide everything. There are three classes of shares A, B and C. Snap had $400M in revenues in 2016. That was after monetizing their platform and “150 million users” fully. Can this number keep growing this fast!? On that $400M figure, they lost $500M. And looking at where the money go, you see that their cost of revenue is higher than their entire revenue. That’s right: to receive a dollar, they have to pay a dollar and ten cents! Let’s not even mention the $180M they invested in research and development… To do what exactly? It’s a camera app? What the hell are they trying to develop? Lastly their products normally require a lot of processing and generate high bandwidth consumption by our users. As a consequence their users tend to come from developed countries with high-end mobile devices and high-speed cellular internet. So is SnapChat just a fad? Will it still be around in 10 years time? The company is competing against juggernauts like Facebook, Google, Twitter and a number of other major players so we will have to see how the story unfolds.