Snap Inc (NYSE: SNAP) is down roughly 25% on Friday morning after its Q3 revenue came in short of expectations as Apple’s privacy changes weighed on its advertising business. But Hightower’s Stephanie Link is still reluctant in buying the dip.
Link’s remarks on CNBC’s ‘Squawk Box’
I’d rather buy Facebook because you get the same theme and the same secular growth rate, but Facebook is a lot cheaper. It’s trading at 10 times EBITDA versus Snap at 33 times price to sales. Most importantly, Facebook is profitable, these guys aren’t.
Facebook itself is down about 10% from its year-to-date high in early September after facing new allegations of choosing profits over safety.
Snap might take time to recover
Link agrees that Snap might eventually pick up as it’s incredibly popular in the younger generations but said it might take time to do so.
They needed to guide to at least 50% revenue growth, but they didn’t. So, this is going to take a hit today, and it’s going to take some time to work itself through. But everyone’s kids are using Snap, so at some point, it’ll be interesting to take a look at again.
Link also likes Facebook more than Snap because the former now has lower expectations, and the privacy issues are already factored into the price. Snap, on the other hand, she added, has to “grow into that multiple” before finding a spot on her buy list.
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