Snap Q2 Earnings: Looking Like Myspace As DAUs Fall

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About: Snap Inc. (SNAP)
by: General Expert
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General Expert
Event-driven, long/short equity, long-term horizon, special situations
Summary

DAUs grew 8% year over year but dropped by 3 million from Q1.

Declining DAUs can be attributed to the app redesign, but regaining momentum is difficult for a social media platform.

Poor revenue guidance reflects declining DAUs and the fact that the management will have to choose between monetization and user retention.

With revenue growth possibly slowing to the high 20s, I don't think the stock deserves to trade at 14x sales.

Snap (SNAP) beat on top and bottom line on Tuesday and investors reacted favorably initially. However, the numbers that I’m seeing are quite concerning.

As a stock priced for growth (negative earnings,