Michael Nathanson, senior research analyst at MoffettNathanson, described Snap as a “field of dreams.” Even with rosy growth forecasts, “at $22
billion, we’re looking at a stock trading at five to eight times estimated revenues in 2020,” he said before the valuation rose even higher.
“I’m concerned that investors will have to wait a very long time, if ever, before they see any meaningful appreciation.”
About the best Mr. Nathanson and Mr. Gold could come up with: Snap’s valuation isn’t “patently crazy.”
A version of this article appears in print on March 3, 2017, on Page B1 of the
New York edition with the headline: Snap Stretches the Limits of Valuation.
“They would need to grow for the next 10 years at more than 50 percent every year with a profit margin of 25 percent, which is extremely high given
that they are now losing money rapidly.” He noted that very few companies had achieved such growth rates in the history of American business.
The sky’s the limit and history is not a guide.”
To justify a valuation of even $25 billion, “you have to make some very lofty assumptions,” Mr. Hamilton said.
How a Money-Losing Snap Could Be Worth So Much -
Testing the upper limits of valuation, Snap’s investors are betting on the kind of rapid growth that few, if any, companies have ever achieved.