Those Who Purchased Snap (NYSE:SNAP) Shares Three Years Ago Have A 38% Loss To Show For It

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For many investors, the main point of stock picking is to generate higher returns than the overall market. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term Snap Inc. (NYSE:SNAP) shareholders have had that experience, with the share price dropping 38% in three years, versus a market return of about 32%. Even worse, it’s down 24% in about a month, which isn’t fun at all. But this could be related to poor market conditions — stocks are down 10% in the same time.” data-reactid=”19″>For many investors, the main point of stock picking is to generate higher returns than the overall market. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term Snap Inc. (NYSE:SNAP) shareholders have had that experience, with the share price dropping 38% in three years, versus a market return of about 32%. Even worse, it’s down 24% in about a month, which isn’t fun at all. But this could be related to poor market conditions — stocks are down 10% in the same time.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=" View our latest analysis for Snap ” data-reactid=”20″>View our latest analysis for Snap

Snap isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over three years, Snap grew revenue at 41% per year. That is faster than most pre-profit companies. While its revenue increased, the share price dropped at a rate of 15% per year. That seems like an unlucky result for holders. It seems likely that actual growth fell short of shareholders’ expectations. Still, with high hopes now tempered, now might prove to be an opportunity to buy.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. If you are thinking of buying or selling Snap stock, you should check out this free report showing analyst profit forecasts.” data-reactid=”36″>We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. If you are thinking of buying or selling Snap stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="We're pleased to report that Snap rewarded shareholders with a total shareholder return of 31% over the last year. This recent result is much better than the 15% drop suffered by shareholders each year (on average) over the last three. We're generally cautious about putting too much weigh on shorter term data, but the recent improvement is definitely a positive. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 2 warning signs for Snap that you should be aware of.” data-reactid=”38″>We’re pleased to report that Snap rewarded shareholders with a total shareholder return of 31% over the last year. This recent result is much better than the 15% drop suffered by shareholders each year (on average) over the last three. We’re generally cautious about putting too much weigh on shorter term data, but the recent improvement is definitely a positive. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we’ve identified 2 warning signs for Snap that you should be aware of.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.” data-reactid=”39″>For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.” data-reactid=”40″>Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="If you spot an error that warrants correction, please contact the editor at [email protected]. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.” data-reactid=”41″>If you spot an error that warrants correction, please contact the editor at [email protected]. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.