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Is Snap worth its valuation? — #SaxoStrats
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Snap, parent company to social media service Snapchat, is valued at close to $30 billion following Thursday’s listing on the US stock market. Saxo Bank’s head of equity strategy Peter Garnry weighs up the company’s potential.
It has never made a profit since it was founded in 2011, but Garnry says that on Snap’s enterprise-value-to-sales metric, it is outperforming Facebook compared to the social network giant's IPO in 2012.
Garnry explains that should rivals mimic Snap's innovations, it could struggle to ignite the size of growth the market has priced-in.
He also says that market expectations over Snapchat to grow its users and revenue base by 50% annually for the next 3 to 4 years could prove to be a tough challenge.
On Thursday, Snap closed at $24.48 - 44% above its initial value of $17.