Can you profit from the Snapchat IPO?

So Snapchat (or Snap, as the company is known), is about to IPO.  There has been a lot of excitement and media attention around this offering and the time has just about arrived for the company to go public.

Now the question is – will you be investing in Snap?  And can you make any money from this deal?

Here are some things to consider before jumping in:

Snapchat is generating revenue, but still losing money

Snap isn't profitable.   They are generating revenue but there is doubt as to how Snap will make more money.  Will they increase the number of ads?  Will we see other apps?  Will they launch more hardware?  Snap does have plenty of options, but whether they can reach profitability is still to be seen.

There is going to be movement

One thing that past tech IPO's have taught us is no matter what happens, there is going to be lots of movement.  Will the price fall dramatically on the first day?  Will it shoot up and give early investors a quick return?  This is where you need to make a judgement call.  If you believe in Snap as a long term investment, then this movement shouldn't worry you.    If you're looking to make a quick profit on IPO day, then this is certainly something to watch.

Will Snap be like Twitter?

Twitter's price has essentially crashed over the past couple of years.   It wasn't considered a good IPO – it shot up at first but has since continued to flop.  If you shorted Twitter, you'd be smiling now, but if you believed in the company it's pretty miserable.  Snap may well go in the direction of Twitter, and shorting could be a smart move.  Can it be the next facebook?  I'm not convinced.

So how can you profit?

I don't think I'll be investing in Snap.  I don't like their outlook.  I may be opening a short position through eToro and of course the people I copytrade may trade it, but I won't be going long myself.

I believe there will be lots of options for traders looking to profit from this, simply because I believe there will be a lot of movement in the price over the next 12 months.  Whenever there is movement, whether up or down, there is a chance to profit.

I'm interested to know if you'll be investing in Snap?  Do you think it's a good buy?  Will you be shorting the company?

Remember – all trading carries risk, so do yourself a favour and trade with practice money.  You won't lose a cent 🙂


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