It’s not Groundhog Day, although it might feel like it for Snap Inc. shareholders.
The Snapchat parent company slid to another new all-time low on Wall Street on Tuesday morning, coinciding with one analyst raising concerns the popular app is on the verge of falling off a financial cliff.
“Running Snap’s business has been a significant cash drain,” said MoffettNathanson analyst Michael Nathanson in a note to clients. “If the current cash burn holds, Snap will need to raise new funding in the back half of 2019!”
After falling more than 5 percent, Snap shares hit $7.08 during midday trading, marking a fresh nadir for the Los Angeles-based company. Snap shares are down 52 percent since the start of 2018.
Snap has routinely posted big quarterly losses since going public in March 2017 — although its $353 million loss during the second quarter of 2018 came in slightly below the analyst projections, giving its share price a short-term jolt. Snap started the year with $2 billion in cash, and has burned about $500 million already — giving it another year or two of runway at its current pace.
Snap CEO Evan Spiegel, in a memo to staff last week obtained by Cheddar, set a goal of reaching full-year profitability in 2019. Nathanson doesn’t see that happening, estimating a $1.5 billion loss next year for Snap.
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SOURCE: The Wrap – Sean Burch