OPINION: As Snap stock heads toward its lowest prices since March 2020, the question is even more important, and answering “yes” should be even harder, writes columnist tpoletti.
When Snap Inc. went public in 2017, this column boiled down the entire investment opportunity to one, simple question: Do you trust Evan Spiegel?
On the face of it, this seems like an investor-friendly approach — Barron’s pointed out earlier this year that investors were suffering while employees were faring better with the hefty stock-comp plans. But it’s also worth pointing out who the biggest investors in Snap are: Spiegel and his co-founder Bobby Murphy.
Besides protecting themselves and their investment, Snap’s executives have shown little ability to head off big issues, nor offer any worthwhile solutions to the current ad downturn. In the third quarter, its revenue grew a paltry 6%, down from the most recent second-quarter revenue growth of 13%. Snap appears to be in a steady revenue slowdown, from its peak growth of 116% in the June 2021 quarter.
The competition factor, mostly from China’s TikTok, was addressed briefly on the company’s call with analysts, but was not really acknowledged by Snap leaders.
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