Contrarian Corpus
short seller research note initial thesis
2018-05-31 · 7 pages

Snap Inc. SNAP

N 4 Narrative
V 3 Visual
C 2 Craft
Original source ↗

The three reasons

  1. 1

    SNAP trades at largest-ever discount to FB/TWTR despite fastest revenue growth

  2. 2

    FB valued at $345/DAU vs. SNAP at $63/DAU implies 5-6x upside

  3. 3

    Short interest at 21% of float makes SNAP ripe for a contrarian squeeze

Primary demands

  • Cover SNAP shorts; Citron initiates long coverage with $17 target price
  • Recognize SNAP as a relative-value play vs. FB and TWTR on EV/Sales and EV/DAU
  • Anticipate potential acquisition by Google or Apple

KPIs cited

EV / 2021 Sales
SNAP 3.4x vs FB 5.0x vs TWTR 6.0x — SNAP at largest-ever discount
EV / 2019 Sales (Mar-2017 IPO)
SNAP 8.5x vs FB 5.9x vs TWTR 3.4x — full reversal of relative valuation
EV per Daily Active User
FB $345/DAU vs SNAP $63/DAU; implies SNAP could be worth 5-6x current value
2018E revenue growth
SNAP +43% vs TWTR +18%
Daily Active Users
SNAP 191M vs FB 1.45B
Short interest as % of float
SNAP 21% vs TWTR 4.7% vs FB 1.2%
Short interest (shares)
~110M shares short, near record highs
Ad impressions growth
+575% YoY in 2017 (with prices down 70% YoY) after self-serve transition
Self-serve ad platform mix
~90% of Snap Ad business transitioned in 2017
U.S. teen favorite social network
Snapchat 45% (Spring 2018) vs Instagram 26%, Twitter 9%, Facebook 8% — Piper Jaffray Taking Stock with Teens
U.S. 13-18yo Snapchat penetration
79% have a Snapchat account vs 73% Instagram, 57% Facebook
Web traffic referral share
Snapchat 13.0% of avg site traffic — second only to Facebook (13.9%)
Stock performance
Down ~50% over prior 4 months
Market cap ex-cash
~$12B EV
2016 reported acquisition offer
Google reportedly offered at least $30B

Pattern membership

Where this document fits across the library's 12 rhetorical / structural patterns.

Notable slides (5)

Notes

Atypical for Citron: this is a contrarian LONG initiation on SNAP, not a short report — Citron explicitly tells shorts they have 'overstayed their welcome' and sets a $17 target. SCQA framing is strong (S: SNAP down 50%, C: shorts piled in at record levels, Q: is the negativity overdone?, A: yes, multiple re-rating + acquisition optionality). Argues via valuation gap vs. FB/TWTR, EV/DAU comparison, teen-mindshare moat, and Google/Apple takeout call-option. Casual, breezy register (Kardashian/Jenner references, 'damn compelling') rather than analytical short-report tone. Visuals are screenshots of Bloomberg charts and third-party infographics (Statista, BI Intelligence) — functional but not designed; little custom data-viz craft. Useful specimen for: short-squeeze thesis structure, 'crowd is wrong' framing, EV/DAU as a single-number argument, and pop-culture rhetoric in finance.