Purchasing Snapchat

Image: Snapchat

​Market Valuation:  $16 Billion 
 
Ironbound Buy-Side Valuation:  $40 Billion
 
Ironbound Assessment:  California based Snap Inc., founded in 2011, is an American camera and social media company.  Our upside valuation potential is $40 Billion based on double digit sales growth.  In 2021, Snap reported having over 300 million Daily-Active-Users (DAU) and generated over $4 Billion in advertising sales.  With sales increasing and operating expenses on the decline, the company should cross $10 Billion in revenue and turn profitable within the next few years.  We like Snap because it is uniquely positioned around the next biggest consumer demographics of Millennials and Gen Z.  In addition, the 2021 Annual 10-K filing discloses numerous holistic value laden initiatives such as: employee value by paying a minimum living wage for all employees globally, customer value with a Privacy Policy statement that can easily be understood in “plain language”, and society value by becoming historically carbon neutral from founding in 2011 through to 2020.  All of which we like.  Unfortunately, the cofounders’ 99% control over voting shares, severely limits a possible takeover – holding the stock price down.  On the other hand, the limited control prevents a sovereign wealth fund or group from acquiring the company for $40 Billion, or 10-times 2021 sales.  At this price, the buyer(s) would acquire $7 Billion in assets and pay about 7¢ per DAU per day for 5 years, a discount to the 10¢ Twitter comparable acquisition, in Goodwill.