Snapchat stock (SNAP) is an interesting play on the growing social media trend for teens and young adults. Let's talk about whether Snapchat is a good stock to buy based on their growing DAU (daily active user) and long term potential.
DAU is the most important metric for social media companies like Snapchat. If users abandon the app then they cannot server advertisements. Snap has steady DAU growth but the company has over $7 billion in accumulated losses since their 2017 IPO. Yikes! What investors look for is revenue growth and Snap does plenty of revenue. They grew Q1 2020 revenue 44% YOY to over $400 million.
The potential is there plus SNAP is still under the IPO price of $24 per share. I think SNAP stock can get cheaper in the short term because Q2 should see higher usage but less advertising revenue. This stock is a good long term hold for investors with a 5 or 10+ year time horizon. Right now, I'll watch the price closely.