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SNAP, expensive at 144X
Current, target price 55, 38 (-31%)

October 23rd, 2021
1 minute read

Sales growth slowed

• Sales grew by a slower 9% in the third quarter to 1,068 million dollars which is below our forecast 1,130 million dollars.
• This brings the average quarterly growth to 24%.
• We predict average growth of 8% in this next 12 months to bring sales to 1,372 million dollars in the third quarter 2022.

Costs improved

• The cash cost ratio improved to -86% in the third quarter & the loss improved to -72 million dollars.
• Average quarterly costs are now at -92%.
• We use the latest -86% costs to predict a -30 million dollars loss in the third quarter of 2022.

Data file & model

Cashflow positive

• Free cashflow turned positive 52 million dollars with investment spending of -20 million dollars in the third quarter.
• Average quarterly Cashflow has now improved to -2 million dollars.
• We use the same -20 million dollars investment spending which with higher sales gives a x positive 168 million dollars cashflow in the third quarter of 2022.

Balance sheet, lower leverage

• Cash declined from 2,052 to 1,972 million dollars in the third quarter.
• Liabilities also declined from 3,913 to 3,671 million dollars so net cash improved from -1,861 to -1,699 million dollars.
• With our forecast cashflow & a no equity payout, net cash will improve to-1,082 million dollars in 12 months time.

Value, expensive at 144X

• SNAP capital from the last five years worsened slightly to -6,606 million dollars in the third quarter but will improve to -5,990 million dollars in 12 months time.
• At the current value of 87,180 million dollars, based on our forecasts, it’s at 14X assets with a 8 years payback on non cash assets & no yield.
• Our free cashflow forecast is 603 million dollars which is a 144X valuation. At a forecast 100X valuation gives a -31% lower target price of 38.