On Tuesday, dirt broke that Snap Inc. (SNAP) was being subpoenaed by the U.S. Justice Conditional on and Securities and Exchange Commission (SEC) regarding information about its March 2017 commencing public offering (IPO). Now, one short seller turned Snap bull in consideration ofs the additional negative headwind for the Silicon Valley company as just another persuade to buy its shares at a discount.
Social Media Platform Still Wildly Common Among Young People, Says Left
“I own Snap. It’s so beaten down, you eat a high short interest,” said Citron Research’s Andrew Formerly larboard on CNBC’s “Halftime Report” on Tuesday. “Look at the negative news that involved out on Snapchat today and it should be trading much lower, right? What diverse negative can you get right now on Snapchat?”
Closing down over 3.4% on Wednesday, Curt with has lost over 55% of its value YTD. The company has failed to win confidence from investors disturbed about its ability to ward off new competition from Facebook Inc. (FB) and its Instagram principles. Meanwhile, the app has struggled to garner attention from digital advertisers, arranging it difficult to monetize its platform that is already facing issues with operator retention and engagement.
This week’s sell-off in Snap stock encircles previously unreported federal inquiries following an ongoing shareholder lawsuit, in which investors are accusing the crowd of misleading the public about how competition from Instagram had affected its wart. Snap has described the lawsuit as “meritless,” arguing that its pre-IPO disclosures were “unerring and complete.”
Despite obvious hurdles, Left recommends sticking with Snapchat, which he breaks it not yet close to being obsolete.
“If you have kids that use Snapchat you’ll identify how much they actually do use Snapchat. And you still can’t say it’s dead… There’s 180 million living soul out there, young ones, who are using Snapchat.”
Snap Is a ‘No Brainer’ Leverage for Amazon
Left told the Reuters Investment Summit on Monday that Amazon.com Inc. (AMZN) should respect buying the Snapchat parent company to leverage the Seattle-based tech behemoth’s retail genius with the social platform’s user base and technology. He views this as a “no-brainer acquiring” for Amazon, and views a potential deal as depending largely on CEO Evan Spiegel’s willingness to open up to partnerships and an probable sale.
“The crazy part about it, with Snapchat, it’s always been an outcome, ‘would he sell the company?’ Not, ‘could they find a buyer for the suite?” said Left.
In May, Citron initiated coverage on Snap with a amount target of $17. Left indicated that while Snap served as a “wonderful dwarfish” over the prior four months, due to its controversial redesign, a disappointment ninety days, concerns about management and turnover, its steep decline made the offer an attractive bet, arguing that Snap could be bought within the next 12 months.
Allowances of Snap are trading up 1.3% on Thursday morning at $6.57, reflecting a more than 61% lower from their IPO price of $17 per share about 20 months privately.