Entering text into the input field will update the search result below

Snapchat's Future: Forget Facebook, Look To Etsy

Jul. 14, 2017 5:21 PM ETSNAP2 Comments

Wall Street is in a tizzy over the news that social media darling Snap Inc. (Snap), commonly called "Snapchat", has seen its shares plunge.

Shares have fallen 36% since the March 2017 IPO.

Investors are distressed that the shares have dropped below the initial IPO price.

Many stock market pundits have been comparing the difficulties the stock is having in its first several months as a public company to Facebook (FB), which also saw its shares sink on disappointing financial results soon after its IPO in 2012.

But that's where the similarities end.

For investors looking for a ray of hope in Facebook's turnaround, they should really look elsewhere.

Snap is no Facebook

The biggest difference between the two companies?

Facebook was always profitable, even in its first year being public.

In 2012 it made $0.16 and earnings have been moving higher ever since. This year, the Zacks Consensus Estimate is calling for $4.91.

Instead of living off of false hopes of being like Facebook, Snapchat investors should really be comparing themselves to what happened at global creative online site Etsy (ETSY)since its 2015 IPO.

Here's why Snapchat's future could play out like Etsy's.

1. Similar Anti-Silicon Valley Culture

Brooklyn Loyal

Etsy was founded in 2005 in Brooklyn as an online store for artists and those selling unique, homemade goods. Its headquarters remains in Brooklyn, despite many online companies being headquartered in Silicon Valley.

It's seen the gentrification of Brooklyn into a hipster neighborhood over the last 12 years. In 2016, it moved into a new 200,000 square foot corporate headquarters complete with twice weekly locally catered meals, a breathing room with yoga classes, and artwork on the wall created by the site's artists.

Working at the Beach

Snap was founded in 2011 and is now located in the Venice Beach neighborhood of Los Angeles, supposedly specifically to avoid being in Silicon Valley.

This article was written by

Zacks.com brings the decades of study and stock picking expertise of Zacks Investment Research to individual investors. Now, you don't to be an investment bank or brokerage firm to get the professional power of Zacks' research. It's all available on Zacks.com. Learn more about Zacks' history and company below.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.