Last tweeted mid march that snap had short term downside and twitter short term upside..snap has fallen back to the ipo price and twitter has risen after a good quarter…the prices have now converged to around 17…
2centview fair value for SNAP now 24 including cash, if you value the earnings 2 years forward where analysts predict earnings to ramp up from 2019 TWTR fair value 16
No one knows which will succeed from here and become the next facebook, Snap has hugely creative product guy in Evan Spiegel and just signed a content delivery deal with Time Warner
Twitter has the president and signed a great deal with bloomberg – data is also a important asset as we move into the world of AI, their product is good but engagement is a problem
Own a small position in one of these name
2centview owns both at a price of 17 target 22…will add more if they drop to 14.
$TWTR has managed to find its way back to $15 – a strong support level from which it has bounced back from many times. It seems to have been forgotten about following the SNAP IPO.
2CentView Fair Value now = $15 if you include the $3 cash on balance sheet.
SNAP – valued around $25bn – is expensive – but there is an expectation it grow users from its current 155m and a reach an important demographic – 15-25 – millennials! It is not expected to make money for a few years, but if they get their products right – they could become a Social Media heavy weight- the products they have developed show they know how to keep users’ engaged – which is key for advertisers.
So, TWTR is fairly valued to ‘cheepish’ and SNAP appears very expensive, and under pressure from FaceBook who is creating products in Instagram to compete with SNAP.
2CentView is TWTR has short term upside – they have been takeover target before, but a recent purchase of stock by Dorsey indicates they are not currently engaged with suitors – but the stock could find its way back to the $17-$18 area – with $20 being a price someone would pay. Long term, they need to figure out how to keep users engaged on their platform – they still have not figured this out.
SNAP has long term upside – but potential short term downside – the legendary investor TEPPER says he would buy at $17 – a break below $20, could see the stock drop back to the IPO price and then it would be a potential buy. Their first earnings report is key – they need to show they are not suffering too much from $FB competition.
So which should you buy? In this case, neither could be the answer – but if I had to make choice it would be $TWTR – figuring out how to keep users engaged cannot be that hard – a full time CEO Would help!