$1.2 billion spent to run Snap in six months
Snap (SNAP) may be forced to seek additional capital before the end of next year because it’s running out of money, according to a recent investor note by MoffettNathanson as cited by CNBC.
Snap’s cash and marketable securities stood at $1.6 billion at the end of June. The company needed $4.3 billion to run its operations in the whole of 2017. It spent $1.2 billion to finance its operations, including funding R&D (research and development) projects, in the first half of 2018.
R&D takes up a large portion of revenue
Research is a key area for technology companies, and many spend large portions of their revenue on R&D. Baidu (BIDU) has said that it funnels ~15% of its annual revenue to R&D projects. Snap spent $1.5 billion on R&D in 2017, amounting to 186% of its revenue for the year. Facebook (FB) and Alphabet (GOOGL) spent ~20% and 15% of their 2017 revenues on R&D, respectively.
Loss narrowed from a year ago
If it comes to raising additional capital, Snap may have to issue new shares or borrow. But releasing large amounts of shares into the market could overwhelm demand and cause the price to come down. While borrowing money may not deliver a blow to its share price immediately, the interest associated with the debt could drive up expenses and eat into Snap’s profits.
Snap posted a loss of $353.3 million on revenue of $262.3 million in the second quarter. The loss narrowed from $443.1 million a year earlier. Twitter (TWTR) and Yelp (YELP) posted profits of $100.1 million and $10.7 million, respectively, in the same period.
Square announced earlier this month that it would start extending loans of up to $10,000 consumers as long as they are buying from merchants that use Square products or services.
After opening on a bearish note on Wednesday, Tesla (TSLA) was trading with 4.8% losses for the day, near $195.25 at 1:16 PM ET.
With voting conducted in seven phases panning six weeks, India’s (EPI) elections have been a grand affair—to say the least. Tomorrow is the day of the results.
Qualcomm (QCOM) stock fell more than 10% in the first half of trading on May 22 after it lost its licensing lawsuit with the US FTC (Federal Trade Commission).
Apple (AAPL) suffered a setback recently when the US Supreme Court allowed an antitrust lawsuit against the company to proceed.
Today doesn’t seem to be a good day for electric vehicle companies. Earlier today, NIO stock hit an all-time low of $4.00.
The cannabis sector has been struggling to find direction on May 22, with cannabis stocks trading on a largely mixed note in the first half.