Analysis of Snapchat share price for trading

Since its introduction onto the stock markets in March 2017, Snapchat shares attract increasing numbers of investors from around the world that wish to speculate on the future of this high tech company that is surfing on the wave of social networks. If you too are thinking about investing in Snapchat shares online or speculating on the share price then we recommend that you read this important information in our detailed review of this company and its activities as well as necessary data such as the real time share price and a technical analysis of historical data since its IPO that will assist you in implementing an effective trading strategy.  

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Our advice for trading Snapchat share

Tip number 1

The fact that the Smartphone market is booming leads to the growing popularity of applications such as Snapchat.

Tip number 2

Snapchat could also benefit from the significant development of teleworking. With more and more people working from home, there is an increasing dependence on instant messaging tools.

Tip number 3

Snapchat could attract more companies and advertisers thanks to its international dimension.

Tip number 4

The recent scandals that have affected other social networks and instant messaging services are of course benefiting Snapchat, which is currently the only application that allows automatic deletion of messages and photos. Confidentiality therefore remains one of the company's strong points for the future.

Tip number 5

But, the competition that Snapchat faces is always very present and multiple. It is therefore essential for the company to continue the race for innovation in order not to lose market share.

Tip number 6

Snapchat's innovation capabilities, particularly due to the lack of profits and therefore a lower investment capacity in R&D, remain problematic to stay up to date and offer new functionalities.

Tip number 7

Snapchat also suffers from certain legal restrictions in some countries that reduce the chances of international development and growth.

Tip number 8

Finally, Snapchat still relies heavily on the IT infrastructure. Indeed, for instant messaging to be considered as quality, it is essential that the bandwidth and speed in the region of use are optimal. There are still many service quality problems.

Trade in Snapchat shares!
75% of retail investor accounts lose money when trading CFDs with this provider.

About the Snapchat Group:

The Snap Company, previously called Snapchat, is known for creating a free photo and video sharing application for mobile phones. It was created by students from Stanford University in the United States. Although this photo sharing system is not original, Snapchat’s time limit aspect on the viewing of media sent by users is unique. This time period varies between 1 to 10 seconds.

Snapchat was recently introduced onto the stock markets; it was valued at 24 billion dollars in the beginning of 2017.

The profits of the Snap Group are generated in several ways, here are the major ones:

  • Advertising revenue through the Discover space.
  • The purchase of bonuses notably enabling the second viewing of a received file.
  • The purchase of filters created by users according to their geographical location or their personal events, called ‘Geofilters on Demand’.
  • The sponsoring of Geofilters or lenses by brands.
  • The advertising displayed on the application between the different views of media or the different ‘snaps’ or during the viewing of the ‘story’.

 

Snapchat’s main competition:

Snapchat is currently one of the most popular social networks in the world. However, even though it has successfully won over its users’ hearts, the company remains strongly rivalled by various other big companies. It is essential that you’re familiar with Snapchat’s competition before you begin trading its shares, which is why we want to provide you with a worldwide ranking of the biggest social networks in terms of number of users.

  • Facebook is, of course, number one with over 2 billion active users per month, as of 2017.
  • Youtube comes in second with 1.5 billion users per month.
  • WhatsApp ranks third with 1.2 billion users per month.
  • Google Hangouts is fourth with 1 billion active users per month.
  • WeChat is fifth with 889 million active users per month.
  • Chinese company Tecent QQ ranks sixth with 877 million monthly users.
  • Instagram ranks seventh with 700 million active users per month.
  • Google + ranks eighth with its 359 million users per month.
  • Twitter is ninth with 328 million users every month.
  • Finally, Snapchat is ranked tenth worldwide with 300 million active users per month.

 

Snapchat’s main partners:

  • In 2014, Snapchat partnered up with Square, a company specializing in smartphone payments, as part of a strategic partnership.
  • In 2017, French bank BNP Paribas established a marketing partnership with Snapchat in order to reinforce its presence on social networks in an attempt to modernize itself in the eyes of active young people.
  • Still in 2017, entertainment giant Time Warner announced an investment of over 100 million dollars on content as well as advertising on Snapchat.

 

Analysis of the Snapchat share price:

The Snapchat share price is currently quoted on the Main Market of the NYSE and integrated into the calculation of the Nasdaq stock market index.

It was in 2017 that Snapchat shares were first introduced on the stock market with a price of $27. Initially they followed a falling trend due to an overvalued estimation. The price reached $19.51 in the middle of the month of March. It then rose to $22 before experiencing a minor drop.

It is difficult to anticipate the next movements of this share price due to the little history that we currently have at our disposal.

 

Economic and financial history of the Snapchat Company:

To enable you to better understand how the Snapchat share price may vary in the future we offer you the opportunity here to examine with us the recent economic and financial history of this company with the dates of important events relating to the company.

  • It was in 2011 that the Snapchat application was launched in the Apple App Store. It wasn’t until November 2012 that the application was also available for Android.
  • In 2013, only two years after its launch, Snapchat received an investment of 13.5 million dollars from the Benchmark risk capital company. In the same year the Facebook Group launched an acquisition bid for the application of 3 billion dollars that was rejected after a preceding refusal of a one billion dollar bid. The Chinese company, Trecent, had also made an acquisition bid of 4 billion dollars, again rejected, as had Google, although their bid amount remains unknown.
  • In the beginning of 2014, Snapchat experienced the hacking of 4.6 million SnapchatDB accounts only a few days after an alert by the Gibson Security Company concerning weaknesses in their application security. Of course, since then Snapchat has improved their security. The same year, in October, Snapchat announced the publishing of advertising messages on their application in the form of photos or videos without geographical targeting that the users can choose to view.
  • At the end of 2014, Snapchat collaborated with the Square payment service to propose a messaging service named Snapcash enabling users to send money to each other. In December leaks relating to emails exchanged between Sony and Snapchat gave rise to rumours of the group possibly launching their own music label concentrating on certain artists that they wished to promote on their platform. 
  • At the beginning of 2015 the Snapchat Group announced the launch of a media publishing service named Discover. This service had the objective of monetising the content offered by Snapchat and creating an advertising space destined for the advertisers who so wished. Still in 2015 the number of estimated Snapchat users amounted to 200 million active subscribers. It was also in 2015 that Snapchat experienced its strongest growth at over 55%, notably due to the publicity displayed by different advertisers.

In 2016 the Snapchat Group purchased the Canadian company Bitstrips, publisher of the Bitmoji application that enables the creation of personalised avatars in cartoons, for 100 million dollars. Still in 2016, Snapchat bought the Vurb application that enables the reservation of events and services close to people’s homes for an amount of 110 million dollars. Finally, around September, Snapchat announced a change of name to Snap Inc as well as the launch of a pair of sunglasses connected and equipped with mini cameras, called Spectacles.

 

The advantages and strengths of Snapchat shares as a stock market asset:

Before you start trading Snapchat shares, it is essential to implement a quality strategy, especially if you are considering taking a long-term position. In this case, the ideal is to know the strengths and weaknesses of this value in order to determine as precisely as possible its evolutionary capacities. First, we invite you to discover the strengths of Snapchat.
The first advantage Snapchat has is of course its user base. The Snapchat group currently has more than 166 million users worldwide. But this does not stop there, since each year, this figure increases by an average of 36%, which should lead to a doubling of users over the next two years.

Snapchat also differs from its main competitors by the uniqueness of its application. Unlike other social networking and image sharing software, Snapchat allows automatic message deletion. What was considered a defect when this application was released has now become a strong point in view of the controversies that affect data security in most of its competitors. This application for mobile phones is also more robust than those of Snapchat's main competitors. In any case, this is the result of various recent research that has reassured consumers.

Snapchat has also chosen to base its strategy on a younger target group of users than its competitors. Thus, it has a majority of teenagers and young adults in its regular users and this target is ideal for a future evolution of Snapchat's offer which has everything to gain by retaining its existing customers over the long term.

To make its users truly addicted and loyal, Snapchat can rely on a fun interface that is mainly based on visual content. However, it has been shown that images are more stimulating than written content and are intended to be more attractive to the human brain.

 

The disadvantages and weaknesses of the Snapchat share as a stock market asset:

As we have just seen, Snapchat shares have many advantages and strengths that could encourage investors to focus on a medium- to long-term bullish strategy. But before taking such a position, it is of course essential to also know the weaknesses of this company that can tip the balance towards a more mixed or downward trend. Here are the main weaknesses of this value.

Snapchat's first weakness is directly related to the undervaluation of its share on the stock market. Indeed, after a failed IPO on the stock market in 2012, the group still fails to attract and convince investors. This damages its brand image and slows down its development.

It should also be noted that the Snapchat group is struggling to diversify its activities in order to generate more income. Indeed, since its creation, the company has tried several times to diversify into different areas of what its main activity offers without any success since most projects have ended in failure with the consequence of a significant loss of money for the company. This was particularly the case with the Snapchat Spectacles application, which failed very badly.

While we can welcome the almost constant increase in the number of users of the Snapchat application, these figures actually lack transparency. Indeed, we notice in parallel that the activity models of the average user of this application become, over time, more and more irregular. The number of users who are really active and therefore potentially profitable has been falling sharply for several years now.

Another weakness concerning Snapchat and its stock market share concerns this time the group's own business model, which depends more and more on advertising in order to achieve its turnover. Indeed, since the application offered to the general public is free, more than 96% of the company's turnover comes from advertising. While this model is well suited for other digital companies such as Google or Facebook, it does not seem to really adapt to the activities of Snapchat users.

To conclude with the disadvantages of Snapchat, we can also deplore an excessive comparison of this application with the Facebook social network. However, Snapchat's model is totally different from that of these two competitors and the functionalities here are much more limited. We also know that consumers prefer to use applications such as Facebook's Messenger or Whatsapp as instant messaging rather than Snapchat, which has some limitations here.

Where to trade in Snapchat shares online?

Although fairly recent, Snapchat shares can now be traded on the stock markets through the best online brokers. You simply need to open an online trading account to buy or speculate in them.

Trade in Snapchat shares!
75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
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