Market Overview

Analyst Says Social Media Space Is Saturated, Sees Snapchat As 'Total Junk'

Share:
Analyst Says Social Media Space Is Saturated, Sees Snapchat As 'Total Junk'

Snap Inc is expected to announce its IPO price as soon as Wednesday, but Global Equities Research analyst Trip Chowdhry believes investors would be wise to steer clear of the social media stock. In his first-quarter social media report, Chowdhry explained how the social media market has become saturated.

“The social media industry is in fix-it mode and is now a zero-sum play,” Chowdhry said. “We are at the tail-end of the social media industry boom.”

According to Chowdhry, the latest innovations from Twitter Inc (NYSE: TWTR), Facebook Inc (NASDAQ: FB), Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) and others have no staying power in the market. He points out that the last major social media phenomenon, Nintendo Co., Ltd (ADR) (OTC: NTDOY)’s Pokémon GO, only lasted roughly three months.

Related Link: Mark Cuban Will Buy Snap On The IPO, If He Can: 'It Can Be A Big Company'

“LiveStreaming, SnapChat, Facebook Live, Instagram, and YouTube are bringing more video user engagement, but we cannot make this a durable investment thesis since the industry is now in a zero-sum play,” he wrote.

Chowdhry was particularly harsh on Snap, calling the company “total junk” and adding that “durability is absent.”

Chowdhry notes that a major under-the-radar threat to these social media companies is the emergence of ad-blocking software. These companies rely heavily on ad revenue, but he doesn’t see ad-blockers going away anytime soon.

In the past year, the Global X Funds (NASDAQ: SOCL) is up 41.1 percent.

Latest Ratings for FB

DateFirmActionFromTo
Oct 2020Truist SecuritiesMaintainsBuy
Oct 2020Wells FargoMaintainsOverweight
Oct 2020MizuhoMaintainsBuy

View More Analyst Ratings for FB
View the Latest Analyst Ratings

 

Related Articles (FB + GOOGL)

View Comments and Join the Discussion!

Posted-In: Analyst Color News Short Ideas IPOs Analyst Ratings Movers Tech Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
HYMCBMO CapitalInitiates Coverage On
DEMorgan StanleyMaintains335.0
SBNYRaymond JamesMaintains138.0
CORTHC Wainwright & Co.Maintains32.0
CYBBFCitigroupDowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com