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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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5 Epic Money Posts From 5 Epic Instagram Channels

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Yes, we’re heading into the ninth inning of the lockdown, and yes, we’re ready to step outside and be real people again.

Still, Instagram has been—and still is—most people’s pastime. And we can’t exactly say it ain’t ours, either.

So because we like to share the stuff that helps you all make money (or at least think about it), we decided to put together five great posts from Instagram that will inspire you to do just that.

Make some money. Here goes.

1. @thebrandstartup

This upstart channel is dope as it is, building its brand in just a few weeks and amassing over 100K followers in the process.

This post breaks down why Bob’s $3K salary > John’s $10K. (Pay attention.)

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3 Simple Strategies You Can Use To Build Your Investment Portfolio

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If you’re starting out with planning your investments, chalking out your goals and how you’d like to achieve them is incredibly important. You’ll need to understand what kind of assets you’d like to invest in–be it private equity or the tried and tested products like treasury bonds, ETFs and stocks–and invest right. Here are three key strategies to build your portfolio:

1. Building Wealth Is All About Thinking Rationally (And Smart)

Having the right mindset can play a huge role in how you build your investments. It’s simply not just about strategy. To ditch following the latest fad in the market, you need to be responsible and have a sense of social indifference–coupled with confidence and patience.

2. Invest Like A Cheapskate

If you’re pumping in $150,000 as investment, on which you incur 1% as fees, look out for ways through which you can cut them down.

If you were to cut costs by a little more than a half, that’s saving you at least $1,120 in fees every year. But that’s not it–when this saving is compounded every year, that 1% fee can tally up to a million (if saved, could win you your big ticket to becoming a millionaire)

3. The KISS (Keep It Simple, Silly) Rule

Funnily enough, most of us think investing your way through millions demands extensive knowledge of financial instruments or strategies. Surprisingly, it’s the simplest of assets that give investors their biggest wins. Many successful investors highlight their success to stocks, bonds and other popular alternative investments, patiently held over time.

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(THROWBACK!) High-Dividend REITs: Are They A Safe Bet?

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Investment in Real Estate Investment Trusts (or REIT’s) are ideal for investors who want a regular stream of income. REIT’s purchase real estate properties and lease them to clients (or tenants). This income generated is then paid to shareholders via dividends.

REIT’s are required to distribute at least 90% of net income to shareholders which means these firms have higher dividend yields compared to regular equity investments. But how many high dividend paying REIT’s are worth investing in? This article looks at REIT’s with high dividend yields and a market cap of approximately $1 billion.

CBL & Associates Properties

CBL & Associates Properties (or CBL) has a market cap of $915 million. This REIT has a dividend yield of 17.4% and pays annual dividends of $0.80 per share. CBL’s portfolio is primarily in regional shopping malls (Class B and Class C).

CBL is grappling with declining sales as revenue has fallen from $1.04 billion in 2015 to $1.02 billion in 2016 and $927 million in 2017. Revenue is estimated to decline to $852 million in 2018 and $835 million in 2019. There have been concerns over the high debt levels (over $4 billion) of CBL as well.

Further, company CEO Stephen Lebovitz also hinted at a possible dividend cut in the future. CBL reduced its dividend by 25% last year as well. CBL has stated that it is looking to reposition its portfolio and focus on redevelopment initiatives. However, investors will not be confident about investing in a stock that has declined from $20 per share in August 2013 to $4.65 in August 2018. The stock is trading 16% above the average analyst price target of $3.91.

Washington Prime Group

Washington Prime Group (or WPG) engages in the acquisition and development of retail properties and this REIT has a market cap of $1.5 billion. WPG has a dividend yield of 12.8% and pays annual dividends of $1 per share. The stock price has declined from close to $20 in May 2014 to the current price of $7.92 which is 6% higher than the analyst target price of $7.45. This year, WPG has however risen over 18%.

WPG is a mall owner with assets across Florida, the Mid-West and the East Coast. In this digital age when the number of people visiting malls has declined, WPG has also seen its revenue decline. Sales have fallen from $922 million in 2015 to $758 million in 2017 and are estimated to reach $724 million this year.

WPG’s funds from operation (or FFO) which is similar to earnings per share for stocks declined 8.4% in 2017, while occupancy reduced from 94% in 2016 to 93% last year. WPG might also have to cut dividends if sales continue to decline over the next few quarters.

Global Net Lease

Global Net Lease (or GNL) has a market cap of $1.5 billion and this REIT has a portfolio of commercial properties. GNL focuses on sale-leaseback transactions across the United States and Western Europe. GNL has over 300 properties with an average lease term of 8.6 years.

GNL’s client base includes FedEx, GSA, ING, and Finnair among others. While GNL’s revenue rose 21% year-over-year to $259 million in fiscal 2017, FFO per share declined 18%. GNL has a dividend yield of 10% and pays an annual dividend of $2.13 per share compared to its reported FFO of $2.10 per share last year.

GNL aims to acquire properties worth $293 million this year which will expand the company’s portfolio. GNL is estimated to post revenue of $283 million in 2018, $303 million in 2019 and $314 million in 2020. GNL is trading at $21.53 which is 11.5% lower compared to analyst average target estimates of $24.

Kimco Realty

Kimco Realty (KIM) has a market cap of $7.2 billion and is one the largest publicly traded REIT. This REIT owns close to 500 shopping centers in the United States with 83 million square feet of leasable property. Kimco has a dividend yield of 6.6% and pays an annual dividend of $1.12 per share.

According to this report from Suredividend.com. “Kimco’s property portfolio has enjoyed rising occupancy and rents over the past several years.” In the first quarter of 2018, Kimco’s FFP rose 5.4% driven by a rise in occupancy and rent. While occupancy rose 1 basis point to 96.1%, rental rates for new leases rose over 15%.

Kimco’s tenants include struggling retail companies such as Sears, JC Penny and Kmart all of whom might close a few stores. Kimco will need to look at acquisitions to drive future revenue. This stock has lost close to 6% in 2018 and is trading at $17.06 which is 1.3% lower than analyst projections.

Senior Housing Properties

Senior Housing Properties (SNH) is a healthcare REIT with a market cap of $4.5 billion and a dividend yield of 8.2%. This REIT owns property worth $8.5 billion and over 700 tenants. SNH shares have increased close to 30% since February this year and the stock is trading at $19.04 which is 4% below average analyst price target estimates of $18.25.

While SNH’s FFO per share fell 16% in 2017, performance has started to improve this year. SNH has managed to beat analyst earnings estimates considerably in the last two quarters. SNH has acquired properties worth over $300 million and sold assets of approximately $800 million since the start of 2017. The proceeds were used to pay off debt.

SNH revenue is estimated to rise 4.1% year-over-year to $1.12 billion in 2018 and 2.1% to $1.14 billion in 2019.

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