"With Snap’s 161 million users, up threefold since March 2014, and having only begun to sell ads late that year, today’s revenue only scratches the surface. Snap generated $1.05 in fourth-quarter revenue per user (versus $4.83 at Facebook, whose quarterly U.S. RPU is nearly $15, and $2.25 at Twitter). Snap’s RPU can multiply, as Facebook’s did post-IPO: As it does, profits will come.
Second, Snap should scale.
Snap’s growth is driven by new features that keep users paying attention — and are cheap to develop. Snap’s gross margins turned positive last year — it’s big enough now to cover the direct costs of providing its service, which are growing much slower than revenue. Boosting revenue fast while spending little is how this works.
SNAP is trying to spin a comparison to FB but it's platform is much closer to TWTR... and we know how TWTR has been struggling to turn a buck and increase users while SNAP has much worse numbers and outlook with no viable plan to do any better that I'm aware of. All signs point to this stock being an utter disaster.
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