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Revenue Growth is No SNAP for TWTR

Brian Bolan

Snap Inc (SNAP) recently has seen new coverage from a few brokerages and today is the first day that is has a Zacks Rank.  The stock started off like a lot of recent IPO’s with a Zacks Rank #3 (Hold). 

Yesterday I wrote an article about the pending flood of research we can expect on the recent IPO.  In that article I discussed who will initiate coverage, who has already started coverage and some recent target prices placed on the stock.  I also guess at potential target prices from the lead in the IPO.

A Prime Comparison

As I try to wrap my head around SNAP, I want to look at a good comparison.  Twitter (TWTR) was once a social media darling – an technically it probably still is, but the stock is anything but. 

CEO and other management issues including a massive brain drain have left the company in a tight spot.  I know that the CEO Jack Dorsey and new Chairman of the Board Omid Kordestani deserve some time to get things rolling, but the outlook just isn’t that good.

Going For Growth

I am a growth guy and I want to see revenues expanding so much that even Mr. Wonderful himself Kevin O’Leary would blush.  SNAP has those sorts of numbers and I will review that idea later in another article, but a major competitor just doesn’t have it.

Take a look at this chart of the revenues and expected revenues for Twitter:

Do you see what I see?  Year over year revenue DECREASES for the next three quarters.  After all those declines, what will they do in the fourth quarter of this year?  Well it is an increase, but not much of one… 1%. 

Portfolio Manager’s View

Imagine you are the growth portfolio manager at some mega fund.  I know you are on the hunt constantly for stocks that will post big revenue increases and you have to know that SNAP is at least going to be showing some solid growth when it comes out of the gate.

One of the stocks that might have been competing for investment dollars is Twitter, but after looking at the above chart, are you the person that wants TWTR over SNAP?  I didn’t think so.

What About The Book?

It wouldn’t be fair to TWTR to just say that SNAP is in there taking away its revenue.  I mean there is another big social media stock out that that seems to be getting a lot of investor attention, right?

Facebook (FB) is a monster and has seen revenue growth accelerate in 2016 comparted to 2015.  Most projections call for some deceleration on the topline, but some of these numbers are just astonishing:

My View

Revenue growth to me is key and as long as it is not present in Twitter (TWTR) I am not really interested in their stock.  Facebook (FB) on the other hand has plenty of revenue growth.  We will get some big numbers next week for what Wall Street is looking for from SNAP.  Stay tuned to see what comes next from what could be the next mega growth story in tech.

Be sure to view this article on Zacks.com and hit the follow the author button to see more from Brian Bolan.  Also, be sure to follow him on Twitter at @BBolan1


Facebook, Inc. Price and Consensus

Facebook, Inc. Price and Consensus | Facebook, Inc. Quote


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