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ANALYSIS: Facebook Is Kicking The Sh*t Out Of SNAP

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Five years ago, Snapchat was the hottest thing around, more popular among users than social media kins Facebook and Instagram.

These days? Not, so much.

For one, since last year’s IPO—then labeled “one of biggest Wall Street flops“—the stock’s been dropping like crazy.

Since February, around the time a single Kylie Jenner tweet wiped out $1.3B in company value, Snap has dropped from a public valuation of $24B to $14B.

And get this: According to its Q2 report, Snap users are dropping like flies. Since Q1, a whopping 3M users have ditched Snap—the first time user count has dropped quarter-over-quarter in the company’s history.

And yes, Facebook has taken some legal hits lately, but Snap could be facing a battle much bigger.

If you can’t buy ’em, steal ’em (their users, that is)

While users are dropping en masse, Snap still sports a robust 188M daily user base. But competition from rivals is getting more intense by the day.

Facebook—who actually tried to buy Snap for $3B in 2013—saw its user base increase to 1.47 billion over the same period.

And powered in large part by their Snapchat story clone Instagram Stories, Instagram has grown to 400M users—more than double Snap’s user count.

Oh, it gets worse.

WhatsApp, another Facebook property, has their own version of Snapchat’s major value prop (WhatsApp Status), leaving you wondering exactly what Snap has to offer.

Users could be wondering the same.

For whatever it’s worth, while Snap’s user count has eroded, WhatsApp has seen a healthy spike in active users, peaking at nearly 450M.

Facebook Stories (at this stage, you get the point) boasts of over 150M users, as well.

When the decline began…

In the chart, we can see that Snap’s user growth has been severely impacted post the release of Instagram Stories two years ago. While Snap’s daily active users (DAU) rose 48% year-over-year in 2016, it fell to 18% towards the end of 2017. An extremely telling blow.

But it’s not just Zuckerberg…

From a business model standpoint, Snap is similar to the other internet blue-chippers (think Facebook, Google, Twitter, etc.). Their revenue is pretty much all advertising income; a total of 97% in 2017.

But that’s pretty much where the comparison ends. Unlike the other tech giants, Snap must be thinking they’re Big Meech or Larry Hoover, because they are blowing money fast. 

Compared to Facebook, Twitter and Google—which have gross margins of 85%, 67%, and 57%, respectively—Snap has a paltry gross margin of 20%.

No way?

Yes way. Snap’s expected to continue to post negative margins in the short term. And they will need to figure out how to boost their average revenue per user (ARPU) substantially if they even want to think about being profitable.

Initially billed as the new Facebook, Snap has pretty much struggled to keep up according to every relevant metric since its IPO.

Facebook, on the other hand? Sure, they had a rough start when they debuted on Wall Street in 2012. But since then, Facebook’s enjoying healthy profits, racking in billions of dollars after tax.

And more importantly, Facebook’s market value has 10X’d, jumping from a $50.92B low to $520B as of Aug. 31, 2018. (They’ve been as high as $615B on July 16.)

So what can Snap do?!

Hard to say. It’s not just Facebook that’s kicking Snap’s rear end. They’re also way behind Twitter in terms of profitability.

In order for Snap to catch up with Twitter’s current growth, Snap will have to increase annual revenue by 46%.

Facebook recovered after a rough start, why won’t Snap?

Well, in theory they could. Facebook did, right? And Facebook’s first few years were much worse.

Valid point, yes. But a couple of key points to consider. For one, Facebook was already the most sought-after social media platform when it went public. That wasn’t really the case with Snap.

And secondly, in order to achieve robust revenue growth, Snap will have to gain market share from Facebook—basically steal its users back. And at this point, that looks almost impossible.

But crazier things have happened. Snap away, WealthGANG…

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Video: Compound Interest, Explained

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A UPS worker never made more than $14,000 a year but retired with $70 million. How? Compound interest. Here’s how it works, courtesy of Investopedia.

 

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3 Ways To Invest From Your Smartphone For Under $5

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The numbers say 80% of millennials don’t invest in stocks.

Reason? Half say they don’t have money, one-third says it’s too early and another third says they don’t know how.

In addition to that, there’s demographic gap. “The average age of a financial advisor is 55,” said Douglas Boneparth, a New York City-based financial planner. “There are more financial advisors over the age of 70 than there are under 30.”

Despite these beliefs, you don’t really need much money, nor experience, to get started. (Just look at our fearless co-founder Odunayo Eweniyi and what she’s pulled off here)

Be that as it may, here are three ways to get started for $5 or less.

1. Stash

Image result for stash app

What: A micro-investment app (iOS and Android) with over 30 ETFs according to industry, sector and risk tolerance.

How it works: Download the app and choose your investment.

Minimum investment: $5

Cost: Fees range from $1 a month for accounts under $5,000 to 0.25% a year.

“We help people who don’t have a lot save money on a weekly basis,” CEO and co-founder Brandon Krieg said in one interview. “Stashers look like America, they look like people you meet every day: they are nurses and teachers and Uber and Lyft drivers.”

2. Acorns

 

What: iOS and Android app.

How it works: Download the app and choose one of six index funds. When you buy, say a cup of coffee for $1.75, it rounds up the change to $2 and deposits the difference.

Minimum investment: $5

Cost: Just like Stash, fees range from $1 a month for accounts under $5,000 to 0.25% a year.

“We’re not trying to preach austerity to the client, because that’s a bummer,” CMO Manning Field says. “Some people will say, ‘Don’t have the cup of coffee.’ We’ll tell you to have the cup of coffee and invest along the way.”

3. Robinhood

What: A commission-free investment app (iOS and Android).

How it works: Download and start buying stocks.

Minimum investment: Whatever stock you want to buy.

Cost: Free.

And by the way, if you want to get a fast start on real estate, here’s Forbes’ list of nine REITs with yields between 8% and 10%.

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CHART: How Blockchain Powers Bitcoin

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Blockchain, Bitcoin. Bitcoin, blockchain.

The two terms go hand in hand—and have become almost ubiquitous with this year’s insane rise (and fall) of Bitcoin.

But what does it all really mean? How does it come together? In this week’s chart, our friends at CB Insights break down exactly how blockchain powers Bitcoin.

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