Today, I need to talk to you about an aggressive young firm.
One that has a stranglehold on an advertiser dream come true.
It reaches more shoppers in the 13 to 34 age group than either Instagram or that firm’s parent company, Facebook Inc. (FB).
And the best part is, it’s still flying under Wall Street’s radar.
In fact, in the roughly six months since June 23, it’s doubled in value. Which is why it fell off the radar in the first place.
But here’s the thing.
Back then, the stock was underpriced, trading at around $22 a share.
And it’s still underpriced – something you won’t hear from many others – even at roughly $50 a share.
Which means I’m expecting it to crush the market from here on out.
Today, you’re going to see just why…
The Many Business Uses of Most Millennials’ Favorite App
Now, then, it’s always important to put the gains we’ve honed in on in context. And that means comparing against the broader market.
Consider that from the date of our chat , the benchmark S&P has gained a respectable 19%.
That means our social media play beat the market by a stunning 484%.
This outsize performance proves two main points:
- As always, the road to wealth really is paved with tech.
- You can get to your final destination – financial freedom – much faster if you follow step one.
The market-crushing firm I’m talking about is Snap Inc. (SNAP), the Santa Monica, CA-based company behind the popular social networking app Snapchat.
Yes, it may have started as a simple messaging app focused on sharing photos with added text and emojis with friends. But it now has fully integrated, ad-supported short-form video content and is on a massive growth curve.
Snapchat said it had over 249 million daily active users in October 2020. That’s up 18% compared to the October prior. The app boasts more than four billion Snap messages sent every day.
And it isn’t resting on its laurels, either. See, the company sees itself as a camera company and is focusing on new ways to use and improve cameras to help people communicate, learn, and have fun together.
That’s why Snap has been pushing hard to integrate augmented reality and machine learning into the Snapchat app. This allows users to do live video chats while still showing the other people on the call all the emojis and other visual customizations that has made the app so popular with millennials and Generation Z.
For example, you can make yourself appear like a character from an animated TV show to other users, while still displaying the movements of your face and body in a natural-looking way.
The machine learning-powered augmented reality also allows users to virtually paint the environment around them, building joint works of local art in virtual reality.
Businesses, meanwhile, can tap into this technology to allow Snapchat users to virtually try on clothing, glasses, and other accessories in the app – and then buy the items directly.
In response to Covid, Snap also added online games to the app. This lets young people feeling isolated during school closures and lockdowns engage with their friends. An added bonus is that the games retain whatever appearance you’ve chosen for yourself in the app.
In order to become a one-stop-shop for the community it’s built, Snapchat recently gained a map function that highlights businesses and places that are popular with other Snapchat users. Over 200 million people use this function every month.
Creators can sell all these customizations on the Snapchat storefront, and Snap takes a cut. Sports shows, news, original programming, and even TV shows are now available on Snapchat, and over 50 million users a month watch TV content on the app.
Snap’s original programming includes talent such as mixed martial artist Conor McGregor, actor Jaden Smith, and comedian Kevin Hart.
McGregor’s show, to take just one example, launched its second season and reached over 14 million viewers.
That’s a number plenty of online video streaming services would love to see.
The Many Uses Translating to Bottom-Line Growth
This strength shows in Snap’s latest quarterly earnings. The app has been building momentum both in developed and developing countries, and sales are up 52% compared to the year before.
But it’s not all just user growth. Snap’s average sales per user jumped 28%, showing that the company’s push into AR and other tech makes for more engaged users – and better ads.
Compared to the year prior, users sent 25% more Snapchat messages and spent 50% more time watching Snapchat Shows. This growth isn’t just limited to North America, either.
Snapchat’s average daily users grew by 7% in North America and 10% in Europe, but surged a whopping 43% in the rest of the world.
All in all, the company delivered a massive beat, as Wall Street analysts were expecting an adjusted loss of $0.05 per share.
Instead, Snap reported adjusted per-share profits of $0.01 per share, blowing expectations out of the water.
So, as you can see, Snap is not only a fast grower but is starting to become a huge earnings machine. In this most recent quarter, the firm’s per-share profits jumped by a staggering 125%.
Now, let’s be conservative and cut that back by two-thirds looking forward. That gives us a projected 42.5% growth run.
At that rate, we’d still see Snap’s earnings double in less than two years.
I believe you want to own as many of these tech crushers as you can get your hands on.
Because, as you can see, they can put you in the fast lane to financial freedom.
Which means it isn’t about working harder, just smarter. Honing in on the tech sector and following a few of the points discussed in the presentation right here allow you to do that.
1,600 people become freshly minted millionaires every single day, so why shouldn’t you be one?
Cheers and good investing,