Today we will analyze American social networks on the example of 4 their main representatives, which are traded on SPb-Exchange: Meta Platforms (the organization is recognized as extremist on the territory of Russia), Twitter, Snap and Pinterest. Previously, there were similar reviews of other sectors.: U.S. Air Carriers, Russian retailers and energy generating companies.
Leading players
Meta Platforms* (NASDAQ: FB) is an American technology company, which recently rebranded and renamed 28 October 2021 with Facebook**, to focus on their new product, the metaverse. Current key assets of the holding: the world's largest social network Facebook**, Instagram service**, WhatsApp messenger** and other small destinations.
Twitter (NYSE: TWTR) is an American social network. As of January 2022, Twitter is the second social network in the world in terms of attendance after Facebook without taking into account Chinese social networks.
Snap (NYSE: SNAP) - American company, who owns the Snapchat messenger, as well as other products: Spectacles Smart Glasses, Bitmoji services, Zenly and other assets. As of the end of 2021, the Snapchat app is used by more than 300 million users.
Pinterest (NYSE: PINS) — American IT company, managing the eponymous service for sharing and uploading photos and images. Pinterest's current audience is more than 400 million users.
General information
| Meta Platforms* | Snap | |||
|---|---|---|---|---|
| Capitalization, billion dollars | 598 | 28,6 | 64,1 | 16,7 |
| Audience (DAU / MAU), million users | 1929 | 217 | 319 | 431 |
| Revenue for 2021 year, billion dollars | 117,929 | 5,077 | 4,117 | 2,578 |
| EBITDA per 2021 year, billion dollars | 54,720 | 0,682 | −0,488 | 0,814 |
| Net profit for 2021 year, billion dollars | 39,370 | −0,221 | −0,488 | 0,316 |
| Net debt for 2021 year, billion dollars | −16,601 | 2,066 | 0,259 | −1,419 |
Operational results
Let's look at the most important user metrics for social networks: DAU / MAU and ARPU. Let's start with the first. DAU / MAU, or daily / monthly active users, is an indicator of the number of registered users, who go to the social network every day or every month. MAU is almost always greater than DAU, e.g. MAU Meta Platforms* — 2919 million users, а DAU — 1929.
ARPU, или average revenue per user, is the average revenue per user, it is also called the average income per unit. Calculated by dividing total revenue by the number of users. This indicator helps investors to see the degree of monetization of the service.
The main trends of the four representatives of this industry are the same: DAU / MAU grows at the expense of international markets, namely the Asian direction, results at the local level, American, market stable. The exception is Pinterest, which is the only one that showed the negative dynamics of MAU in 2021 against the background of explosive growth in 2020 and the lifting of quarantine restrictions, because of what people began to spend more time outside the house.
As for arpu dynamics, then everyone's situation is also identical: Meta Platforms Core Income*, Twitter, Snap and Pinterest earn in the US, because for advertising - the main type of earnings of all social networks - in the US market, customers pay more. According to Forbes, the US advertising market in 2022 will grow to more than $ 300 billion, and the global advertising market - up to more than $ 700 billion.
American APRU in 4 quarter of 2021:
- Meta Platforms* — 77,24 $.
- Twitter — 23,29 $.
- Snap — 9,61 $.
- Pinterest — 7,43 $.
International APRU in 4 quarter of 2021:
- Meta Platforms* — 10,14 $.
- Twitter — 3,81 $.
- Snap — 1,65 $.
- Pinterest — 0,57 $.
Annual dynamics of DAU / MAU, million users
| Meta Platforms* | Snap | |||
|---|---|---|---|---|
| 2016 | 1227 | 103 | 158 | 160 |
| 2017 | 1401 | 115 | 187 | 216 |
| 2018 | 1523 | 126 | 186 | 265 |
| 2019 | 1657 | 152 | 218 | 335 |
| 2020 | 1845 | 192 | 265 | 459 |
| 2021 | 1929 | 217 | 319 | 431 |
Annual dynamics of ARPU, Dollars
| Meta Platforms* | Snap | |||
|---|---|---|---|---|
| 2016 | 22,52 | 24,55 | 2,55 | — |
| 2017 | 29,01 | 21,24 | 4,41 | 2,19 |
| 2018 | 36,66 | 24,14 | 6,34 | 2,85 |
| 2019 | 42,66 | 22,75 | 7,87 | 3,41 |
| 2020 | 46,59 | 19,35 | 9,45 | 3,69 |
| 2021 | 61,13 | 23,40 | 12,91 | 5,69 |
Future projections
Meta Platforms*. The company presented a weak forecast for 2022 amid rising inflation, weak demand from advertisers due to disruptions in their supply chains and Apple's new privacy policy, That, according to the company's CFO Dave Venera, will take about $ 10 billion of advertising revenue in 2022.
Key points:
- Management predicts, that revenue in the first quarter will grow by 3-11%, to 27-29 billion dollars. This is the weakest growth dynamics in recent years. 6 years.
- Total costs in 2022 will amount to 90-95 billion dollars, which corresponds to the company's previous forecast of 91-97 billion dollars. Key growth will come from investments in personnel and IT infrastructure.
- Capital expenditures this year will be at the level of 29-34 billion dollars. Fixed assets will be used for investments in data centers, Server, network infrastructure, office premises, artificial intelligence and machine education.
- The tax rate for the company in 2022 will not change relative to 2021.
Twitter. Management announced a moderately negative outlook for 2022, which fell short of Wall Street targets. Nevertheless, it is worth recognizing, that now the main focus of market investors is concentrated on the implementation of the company's business plan until 2023. You can read more about this in the analysis of Twitter's financial results.
Forecast for 2022:
- Revenue in 1 quarter will grow by 13-23% - from 1.036 to 1.17-1.27 billion dollars, and annual revenue — on 20%, to $6.092 billion.
- Operating loss for the first 3 the month will be in the range of -0.225 to -0.175 billion dollars. For comparison: in 1 quarter of 2021 recorded a positive 0.052 billion dollars.
- The company's option expenses in 2022 will amount to 0.9-0.925 billion dollars.
- Capital expenditures this year will decrease by 5-11%: with 1 to 0.9—0.95 billion dollars.
- DAU growth rate in both regional markets will accelerate compared to 2021.
Snap. This social network has published the strongest forecast. Even taking into account the high base of last year and large investments in 2022, the company's growth dynamics will be the maximum of the four presented in this review.. Growth rate in 1 quarter will be 34-40% against 3-11% for Meta Platforms*, 13—23% from Twitter and 18-19% from Pinterest.
Forecast of 1 quarter of 2022:
- The company's DAU will grow by 3% — from 319 to 328-330 million users — compared to 4 quarter of 2021.
- Revenue will increase by 34-40% and will amount to 1.03-1.08 billion dollars.
- Adjusted EBITDA will be close to zero, which corresponds to the levels of the previous year.
- 2022 will be a year of significant investment for the company in its future growth.
Pinterest. Despite the fact that after the publication of the financial results for 4 quarter shares of the social network grew, the forecast of future indicators was not very liked by the market. This led to the fact that, that many analysts have lowered their target prices on Pinterest.
Forecast of 1 quarter of 2022:
- Revenue will grow by high teens, that is, by 18-19%, to 0.572—0.577 billion dollars.
- As of 1 Pinterest's MAU in the U.S. was approximately 86.6 million users in February, and the company's total MAU worldwide is 436.8 million users.
- Operating costs of the social network will increase by 10% in 1 quarter and on 40% in 2022, as the company continues to increase its investment in headcount and its own content ecosystem.
Annual growth dynamics in terms of EBITDA, billion dollars
| Meta Platforms* | Snap | |||
|---|---|---|---|---|
| 2016 | 14,769 | 0,751 | −0,459 | — |
| 2017 | 23,228 | 0,863 | −0,720 | −0,093 |
| 2018 | 29,228 | 1,200 | −0,575 | −0,039 |
| 2019 | 29,727 | 1,209 | −0,202 | 0,017 |
| 2020 | 39,533 | 0,997 | 0,045 | 0,305 |
| 2021 | 54,720 | 0,682 | 0,617 | 0,814 |
Comparison by multipliers
| EV / EBITDA | P / E | P / S | net debt / EBITDA | |
|---|---|---|---|---|
| 45,04 | Otric. | 5,64 | 3,03 | |
| Meta Platforms* | 10,62 | 15,18 | 4,99 | Otric. |
| Snap | Otric. | otrits. | 15,58 | Otric. |
| 18,79 | 52,90 | 6,48 | Otric. |
Arguments for
Meta Platforms*. The company has three growth drivers. The first is the development of the metaverse.. Management plans to create its own universe called Meta*, where users will be able to move to other virtual worlds, buy and sell goods, To work, live and relax.
The second driver is a strong underestimation, coupled with excellent financial results.. The company has the lowest multiplier values compared to three other competitors, but at the same time earns from each user 3-10 times more, than other social networks.
The third driver is the strength of the brand, the cost of which is now estimated at 226.7 billion dollars. According to this indicator, the company ranks sixth in the world., and if you look only at the sectoral breakdown, then in the industry "Media and Entertainment" Meta Platforms* ranks third after Google and Tencent. Of the four presented in this ranking, there is only Snap with a score of $ 21.6 billion and the 82nd place..
Brand value, billion dollars
| Amazon | 683,9 |
| Apple | 612 |
| 458 | |
| Microsoft | 410,3 |
| Tencent | 240,9 |
| Facebook** | 226,7 |
| Alibaba | 196,9 |
| Visa | 191,3 |
| McDonald’s | 154,9 |
| Mastercard | 112,9 |
683,9
Twitter. The key driver of the growth of the social network is an extremely ambitious business plan of the company until 2023, according to which the management plans to reach the following operational and financial results: DAU will grow from 217 to 315 million users, annual revenue - from 5,077 to 7.5 billion dollars.
Snap. The main story of growth among the represented four, and the company is growing not only, like other competitors, in international markets, but also locally. Over the past three years, the growth of the audience of the social network has been: in the United States — 20%, in Europe — 35%, in other countries — 185%.
An additional driver of the company's growth can be identified by the strongest forecast for 1 quarter of 2022 compared to other representatives under consideration. Taking into account the high base of last year, the growth in 2021 averaged 65% — the current rate of 34-40% can also be called impressive.
Pinterest. The main speculative idea is the M deal.&A. In 2021, the media reported on the desire of the two companies to buy this social network.. At the beginning of the year, they talked about Microsoft's interest, which valued Pinterest at $50 billion. Near the end of the year, PayPal considered buying the social network for $ 45 billion.. These two estimates are almost three times higher than the company's current capitalization..
The second driver is an increase in the monetization of the service., which should lead to an increase in financial results and an increase in the capitalization of the social network. The company earns the least income per user in comparison with competitors. Now the management is working on correcting this situation..
Arguments against
Meta Platforms*. If Snap has published the strongest forecast for 1 quarter of 2022, then Meta*, vice versa, presented the weakest data, because of what the company's capitalization immediately collapsed by more than 25%. After a strong 2021, in which the company's financial results increased by 37%, in 2022, the growth rate will decrease to about 10%. The main reasons for this: COVID-19, apple's new privacy policy, inflation and high base 2021.
The second argument against is the company's constant problems with government regulators in different countries.. For example, in the EU Meta* accused of too small a camera in smart glasses, in the UK want to create a special body to supervise large technology companies, in the US, the holding is credited with inciting aggression and hatred among users, and in Russia Meta* is recognized as an extremist organization.
Twitter. The social network has two arguments against. The first is the departure of the founder and former CEO of the company Jack Dorsey. At the end of November 2021, he left the post of his own free will.. Since the beginning of 2020, some shareholders, who were dissatisfied with Dorsey's work, demanded his resignation, but then it was not possible to do so, as employees staged a flash mob in his support. Now Jack has decided to concentrate on his other projects.. As strange as it sounds., but the market took this news positively, shares rose by 11%.
The second negative driver is weak financial performance in 2021, which you can read more about in the Twitter review. The company's results fell slightly short of market expectations., but the management managed to almost completely neutralize the current negative data with an increased buyback..
Snap. The main disadvantage of the company is a high rating in comparison with competitors. The values of some Snap multipliers are approximately in 3 times higher, than Meta Platforms*, Twitter and Pinterest. The main reason for this feature is the fastest growth rate of financial results..
Pinterest. This social network has two negative drivers. The first is negative operating dynamics.: in 2021, the total audience of the company decreased by 6% — up to 431 million users. The second disadvantage is the weak current monetization of the service., which management plans to improve in the future.
What's the bottom line?
All four companies are interesting in their own way, therefore, you should choose based on your priorities:
- Based on value investing, then you should choose Meta Platforms*: the company now earns the most – meaning the income per user, — and is priced the cheapest of all — the company's multiples are now at an absolute historical minimum for the last 6 years.
- From the perspective, then in this case it is worth paying attention to Snap, the company shows the fastest growth rates.
- If you buy under the idea of a future transaction M&A, then your choice is Pinterest, this network has a huge audience and a completely adequate assessment.
- If you are looking for a company with the highest ambitions, then it's Twitter, whose management plans to increase its audience in the next two years by about 50%.
