How Snap Could Be A $200 Billion Company In 5 Years

After a nearly picture-perfect run over the past two years, Snap is worth $100 billion, its value quadrupled. But what if that was a low—perhaps really low—figure?

The company held its first Investor Day on Tuesday since going public in 2017.  These gatherings are as common as Christmas in the corporate world, a time for publicly traded businesses to outline future plans and set expectations. Most of them detail slow, incremental change. Not Snap’s, though.

Some takeaways:

• The company thinks revenue can grow by 50% or more over the “next few years,” a time period that analysts think accounts for roughly the following three. It would take Snap’s sales from $2.5 billion in 2020 to close to $4 billion this year and surpassing $10 billion by 2024. 50%-plus growth would represent an increase over what’s already been a strong annual increase in sales. Over the last three years, revenue has risen by an average of roughly 45%.
• Spotlight, a feed of user-generated content meant to compete with TikTok, had 100 million monthly active users last month and 175,000 submissions—signaling a strong start for the new section of Snapchat. Importantly, as Spotlight continues to grow, Snap expects it will be able to place its most lucrative ads there, a significant boost to revenue.
• Snap’s map feature is one of its least talked-about features, but the company thinks the geolocation part of its app is how it’ll attract a large amount of small- and medium-sized businesses to Snapchat. It already has 35 million on the platform. Adding these types of companies to its platform is, of course, what helped Facebook push up its audience and revenue during the 2010s.  
• Right now, Snap trades for over $70 a share at roughly 40 times sales, an indicator that investors are willing to pay up considerably for a company they expect will grow greatly. It would be hard but not impossible for Snap to maintain this loft valuation. A more conservative assumption might be 20 times sales, approximately the average valuation fetched by the stock over the past two years. At 20 times sales, Snap could be a $200 billion company by 2025, assuming its revenue climbs as the company thinks it can—to $10 billion-plus. John Blackledge, a Cowen analyst, has actually extrapolated out further to 2026, when he sees Snap revenue passing $20 billion, a point at which the market cap could be closer to $400 billion.