This is a bull thesis on Snapchat ($SNAP)
**Background:** Snapchat is a tech company best known for enabling you to send and receive self-deleting nude pics that you’re definitely not gonna screenshot 😉. But the company is so much more. The growing social media giant is a way to communicate across the globe, zoom in on specific areas of the world with the lens feature, supplant your shitty life with AR, get your fix of jerk off fuel (YesJulz), watch Snapchat original series (don’t actually), and hide your busted ass face from future tinder dates using filters (Big nose Becca). Why does this matter? Because it’s gonna fuckin print, bitch. Look at what I’m telling you. This company is Pumping up users, it’s PUmping up content, it’s PUMping up revenue, and its PUMPing up my cock.
Let’s get serious. Snapchat produces nearly all revenue by offering advertising products on a fixed fee over time or by impressions delivered. Pretty simple business model. You open our ap, you click the shit, and we blast your frontal cortex with digital xenoestrogen that convinces you to buy overpriced shit made for twinks and teeny boppers.
Since its exciting IPO in 2017, SNAP has failed to turn a positive proft. The stock traded sideways until Q3 of 2020 when substantial growth in daily active users, revenue, and promising product innovation lifted the stock to a new ATH. The first year of positive free cash flow in Q1 2021 earnings lifted it even higher.
**Technical Analysis**: Then, SNAP traded within a $67-48 channel for about four months before a double top on 07/07/2021. The price has settled out to STRONG support around the 59$ price range. If it holds here, this presents an excellent entry for a run and rip through earnings.
Figure 1. SNAP 20D/1H
**Path to profitability**: What makes me so sure SNAP is going to beat earnings? First, SNAP Has exceeded 5 consecutive earnings estimates and six is my lucky number. Second, there are noticeably more ads and for longer periods of time. Don’t forget, that shit is how they make their money. Consequently, revenues increased 66%, revenue per user increased 36%, and a whopping 2,835% increased free cash flow YOY in Q1 2021 earnings. The effects of the increased ads and new platform products are to be seen in this Q2. The earnings whisper number is 844m; a nearly 100% increase in revenue YOY
What are some of those new platform products? First, sponsored Lens with American Eagle, Fit Solutions (a sizing tech company), Gucci sponsored AR Lens, and camera kit integration with Moj (the TikTok of India). You can find all that shit [here](https://s25.q4cdn.com/442043304/files/doc_financials/2021/q1/Q1’21-Earnings-Slides-Final-4.22.21.pdf) in their Q1 2021 Earnings Report.
What’s got my bullcock so turgid though, SNAP has increased their daily active users from 229m in Q1 2020 to 280m in 2021. This rise in daily active users is not entirely attributable to COVID lockdowns either. The userbase has been increasing steadily since 2018 in America, Europe, and the “rest of the world.” Mind you, “rest of the world” is not coded language for small shithole countries. “Rest of the world” includes INDIA, which accounts for 17.7% of the world’s population and the second largest population of daily active users. This is the fucking Mesopotamia of active users. SNAP is proving to be a rich hunting ground for retailers.
How does SNAP attract retail advertisers? Premium content. The D’amelio sisters, Charli and Dixie, are TiTok stars with 171m followers between the two of them. Their most recent advertising campaign on TikTok has raked in the [raked in the fucking dough](https://www.tubefilter.com/2020/07/22/charli-dixie-hollister-jeans-lab-campaign/) for clothing retailers like Hollister. The sisters proved that they are highly effective brand ambassadors. They are going to do it again on SNAP. These two are now featured in [original shows](https://variety.com/2021/digital/news/snapchat-megan-thee-stallion-charli-dixie-damelio-1234966360/) on SNAP. This content presents a clear avenue for retailers hoping to advertise their merchandise and a path for SNAP to increase monetization of its platform.
A bear may reasonably say that relative to other tech peers, there is no multiple that aligns with the current share price. First, ber are fuk. Second, they would be correct in saying that. Third, the future growth in user monetization available to SNAP far outscales its current earnings (figure 2). Additionally, the CEO of SNAP pretty much said, we [don’t need an army of punjabis](https://www.cnbc.com/2021/03/03/snap-ceo-evan-spiegel-50percent-growth-without-new-users-or-engagement.html) to pump our active users up to turn a 50% YOY gain on revenue, all we need to do is turn the fuckin ads on. And the ads are on my friend.
Figure 2. SNAP revenue per user relative to peers
Q1 2020 SNAP guidance estimates Q2 revenue between 820-840m, up from 454m in Q2 2020. The increased monetization of the platform, in conjunction with a rapidly rising userbase presents the real possibility of a supercharged green dildo.
Due to report earnings at market close on July 22.