Snap Inc (SNAP) Should Sell Out to Alphabet (GOOGL)

Snap Inc (NYSE:SNAP) continues to sink following its discouraging second-quarter earnings report. But fear not, SNAP stock holders … there’s still hope. All CEO Evan Spiegel has to do is something he has disparaged since the company was founded: sell out … to Alphabet Inc (NASDAQ:GOOGL), no less.

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A Business Insider report earlier this month said Alphabet Inc (NASDAQ:GOOGL) floated a hefty $30 billion offer for Snap last year, and there might have been other more informal talks beyond that.

If that’s the case, it’s time for Spiegel to rethink things. For the sake of SNAP stock investors, taking the money from Alphabet — if it’s still on the table — is the best option now.

Snap’s latest earnings report highlights the need for drastic action.

Revenues of $182 million came in short of Wall Street expectations for $186.8 million, and a net loss of $366 million was far wider than the $115.9 million that analysts expected Snap to lose.

But most importantly, user momentum continued to decelerate. In Q2, SNAP added 7.3 million daily active users (DAUs) to fall under the consensus for 8 million. A year ago, the company was adding more than 20 million users per quarter!

The big issue is Facebook Inc (NASDAQ:FB), which has turned Instagram Stories into a Snapchat-copying juggernaut. That service is adding 50 million users per quarter … and at least one or two Snapchat features that often, too.

But the strategy is working, and is reminiscent of what Microsoft Corporation (NASDAQ:MSFT) pulled off at the dawn of the Internet revolution. The company leveraged its Windows platform to pulverize Netscape, which would go on to lose much of its market share within a few years.

Snap & Alphabet

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