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SNAP, 52% sales growth
🎯 📲 📈 USD37.6
Last 12-month cashflow -USD856m ⬆️
October 21st, 2020
⏰ 1 minute read
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Sales
To say that sales growth re accelerated in the 3Q would be a gross understatement... sales grew by +52% from a year ago to USD679m, which is a whopping 36% above our forecast. US growth was +56% while other markets grew +43%. We raise our sales forecast growth to +39.7% this next 12 months which is a total of USD3bn.
Cashflow
Cashflow was more negative than we had predicted at -USD331m in the 3Q, excluding working capital. This is because investment spending was higher at USD375m. But this is mostly from financial investments. If we use the recent capex average USD60m plus our higher sales we get a positive quarterly free cashflow of +USD138m by the 3Q 2021.
To say that sales growth re accelerated in the 3Q would be a gross understatement... sales grew by +52% from a year ago to USD679m, which is a whopping 36% above our forecast. US growth was +56% while other markets grew +43%. We raise our sales forecast growth to +39.7% this next 12 months which is a total of USD3bn.
Cashflow
Cashflow was more negative than we had predicted at -USD331m in the 3Q, excluding working capital. This is because investment spending was higher at USD375m. But this is mostly from financial investments. If we use the recent capex average USD60m plus our higher sales we get a positive quarterly free cashflow of +USD138m by the 3Q 2021.
Sales growth re accelerated to 52%, cashflow will turn positive, expensive, but we have an even higher target price...
Balance sheet
The balance sheet has been in net debt because of the negative cashflow. Net debt increased to USD1,154m up from USD695m in the 2Q, but again this is because of lower cash as money shifted into investments, not higher debt. With our forecast for positive cashflow coming next year, net debt will reduce back to USD918m in 12 months time.
Profit
The net loss also improved sharply to -USD200m from -USD326m in the 2Q as sales increased. This brought the cash cost ratio of net profit add back non cash costs minus sales as a % of sales down to 98%. We predict the cash cost ratio will improve to 85% with higher sales giving a lower 12 month loss, -USD383m.
Value
The total capital raised is steady as of the 3Q at USD5,535m & SNAP is now ready to start paying capital back. At USD40.89bn, it’s 13.64x sales, 9.39x assets, 20.91x equity with no profitability or yield yet. Our 3Q 2021 cashflow annualized is USD552m. At 1% because of the fast growth, this gives a revised higher target price of USD37.6.
The balance sheet has been in net debt because of the negative cashflow. Net debt increased to USD1,154m up from USD695m in the 2Q, but again this is because of lower cash as money shifted into investments, not higher debt. With our forecast for positive cashflow coming next year, net debt will reduce back to USD918m in 12 months time.
Profit
The net loss also improved sharply to -USD200m from -USD326m in the 2Q as sales increased. This brought the cash cost ratio of net profit add back non cash costs minus sales as a % of sales down to 98%. We predict the cash cost ratio will improve to 85% with higher sales giving a lower 12 month loss, -USD383m.
Value
The total capital raised is steady as of the 3Q at USD5,535m & SNAP is now ready to start paying capital back. At USD40.89bn, it’s 13.64x sales, 9.39x assets, 20.91x equity with no profitability or yield yet. Our 3Q 2021 cashflow annualized is USD552m. At 1% because of the fast growth, this gives a revised higher target price of USD37.6.
