Friday, August 04, 2017

Google Interested in Snap?

This article was posted on Business Insider on Thursday 08/03 and is about "rumored" interest Google had in buying Snap last year. The price tag mentioned in the article is $30B. On news of this story, SNAP's slumping stock price rose 4%. Since IPO, SNAP's stock price is down about 20% and current Enterprise Value (Market Cap  less cash) is about $12b. A $30B price would be more then 2x EV for the company- as the article points out, investors must be ecstatic.

Before going further- please click the link and see how cool Evan Spiegel looks in his aviators and deep-v t shirt.

How does this relate to class? Well, if anyone has read anything about SNAP since IPO, its apparent that there are serious investor concerns about how they will monetize their user base and if they can justify their lofty valuation.  A partnership with Google could really help, as Google dominates the digital ad space, which is how SNAP hopes to make their money. In addition, as investor love for snap has soured, getting out of the public market may allow them to stop worrying about quarter to quarter performance and focus on making their product more of a cash machine.

Is it likely this will happen? Maybe. In the near term- probably not.

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