SNAP - Snap: It's A Strong Sell In 2024

2024-01-24 17:55:55 ET

Summary

• Snapchat faces long-term challenges in monetization and competition, particularly from TikTok.
• The user base of Snapchat offers lower monetization potential compared to other social media platforms.
• The high reliance on stock-based compensation at Snapchat raises concerns about the alignment of management with shareholders.

Introduction

I have a confession to make... while I am primarily a long-only investor, from time to time, I will, on occasion, buy out of the money put options on select companies in an attempt to both capitalize on my high-conviction ideas and hedge my portfolio.

I still believe the best way to build long-term wealth is to buy and hold the best stocks over many decades and that, for most people, options and short positions are a waste of time and money. This investment is an exception to that personal rule I've set for myself. As a thought experiment, sometimes I think about what I consider to be the worst businesses....

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