Why Snap's Valuation Warrants Caution
Shares of Snap Inc. (NYSE: SNAP) have performed incredibly well over the last 12 months -- delivering an almost 300% return -- outpacing its main competitors in the social media space. The company won the attention of investors as it delivered strong user and revenue growth in 2020, driven by the stay-at-home economy.
That momentum appears to have carried into 2021, with those key metrics still at elevated levels (but slowing) in the company's first-quarter earnings report. However, given Snap's struggle to turn big revenue gains into profits, there are some concerns about its current $92 billion valuation. Considering that number is 32 times full-year 2020 revenue, investors may want to proceed with caution.
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Source Fool.com
