Snapchat is one of the most loved Snapchat in the entire world. Here’s the inside scoop on how you can own a piece of Snapchat through online investing.
Hundreds of millions of users around the globe are expressing themselves in new ways by living a Snapchat (SNAP) moment. Snapchat is the social media app allowing users to live in the ‘real’ moment by merging the digital and physical worlds into a photo snap.
With the addition of augmented reality, both users and advertisers are bringing interactive snaps, stories, and videos to life.
As copycat competitors enter its market, Snapchat continues to be first-to-market with innovative AR lenses, filters, and other tools to create richer human experiences in daily chats with family and friends.
1. Decide if Snapchat stock is the only stock you want to buy
We’d like a word before you buy anything. Are you absolutely sure you want to buy an individual stock? Stock picking is extraordinarily hard to do well.
Picking an individual’s stocks is a lot like playing the lottery. The top best performing 4% of stocks accounted for the entire wealth creation of the US stock market since 1926, which means there were lots and lots of losing stock pickers.
If you’re sure you want to own some SNAP, there’s a lot to said for the “mad money” philosophy of investing.
If you own a properly diversified investment portfolio and have a little discretionary, or “mad” money on hand you’d like to use to speculate, great.
Roll the dice. But a good rule of thumb is that you should gamble with no more than 5% of your entire portfolio.
2. Choose where you want to purchase Snapchat stock
If you’re ready to buy SNAP, you have a few choices.
The absolute easiest, cheapest way to buy stocks is through an online discount brokerage. Accounts can be opened in ten minutes if you have social security or social insurance number, a home address, and an employer’s address.
Account minimums vary considerably in the minimum investment they require to open an account. They also normally charge a fee for each stock you trade.
Most will assess a flat per-trade commission fee for any stock purchase, big or small, that generally range from $5-$10 per online trade. If you have a small amount of money to invest, look out for a provider that offers a low minimum investment to open an account.
Human Stock Broker
Most brokerages do employ humans to execute stock trades, but they’ll charge a lot more if you need to use one, so do your best to crack the system without the assistance of another warm body.
If you’re nervous, you’ll find scads of videos for buying stocks on all the major online brokerages on YouTube.
If you have a financial advisor, you may choose to execute the trade through him or her.
The best advisors are “fee-only,” meaning they’ll either charge you a flat fee or take a small percentage of the value of your portfolio every year and hopefully won’t nickel and dime you with inflated trading fees for the purchase of one stock.
Financial advisors are useful for providing you with an overall financial plan but you probably don’t need one to trade individual stocks.
In general, automated investing services (sometimes called roboadvisors) like yours truly will put together a diversified basket of ETFs for their clients based on their investment goals rather than individual stocks.
Wealthsimple’s patron saint, after all, is Harry Markowitz, the Nobel Prize-winning economist whose Modern Portfolio Theory showed that diversification both minimized portfolio volatility while maximizing reward.
So who knows—Snapchat may well be one of the hundreds of stocks held within a Wealthsimple portfolio, but automated investing services aren’t generally the right place to go if you’re in the market for larger positions in individual stocks like Snap Inc.
3. Determine how much money you want to invest in Snapchat stock
Not to sound like a broken record, but again, try to avoid putting any more than 5% of your total investment portfolio in individual stocks.
Currently, SNAP’s share price is within the budget of many investors so you’ll have no trouble buying one or a few shares, unlike, for instance, Google, which has become like the Dom Perignon of stock purchases.
If you’re the type who depends on your fingers and toes for all math, you’ll be glad to know that most platforms will ask you to plug in your desired investment amount and will then spit out how many shares that amount will buy you.
4. Choose the right order type to buy Snapchat stock
There are three primary order types online platforms will provide for stock purchases.
If your money is burning a hole in your pocket and you need your SNAP right now, choose this type. If stock markets are open, it will execute the trade immediately, or just as soon as the market opens next.
The price you will pay will be right around the latest traded price for the stock, give or take a few cents per share.
SNAP experiencing what looks like a momentary inflated stock price you suspect will soon float down to earth? Execute a limit order in this case.
You’ll plug in the lowest price you’d be willing to pay for SNAP, and just as soon as it crosses that threshold (provided it ever does) your purchase of SNAP will be automatically executed.
Want to buy or sell SNAP but not at its current price? Pick any price you like. This is called a stop price. Perhaps you want to sell it if it goes below a certain threshold. For this, you would place what’s called a sell-stop order.
Or maybe you want to buy when it falls below a certain price. For this, you’d want to a buy-stop order. Either scenario would automatically trigger a market order, or purchase, at that moment.
5. Purchase Snapchat stock
You’re so close to owning SNAP now! One word of caution: Online platforms are pretty careful to avoid executing unwanted trades, so they will generally show you a screen showing exactly what you’re about to buy before you buy it.
It might look like you’ve already made an order for SNAP, but you may still need to hit a “trade,” or “execute trade” button. Most platforms will immediately email you a confirmation of your purchase.
Congratulations, you stock trader. Try not to turn into a weeping mess when Evan Spiegel appears at the next Snap Inc. shareholders’ meeting.
Price Details for Snapchat (SNAP)
The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.
1. Is Snapchat stock fairly valued?
On a price-to-sales and price-to-book value basis, SNAP shares appear overvalued. SNAP is trading at 14 times sales, double that of the Internet Services & Social Media Industry of 7 (CSIMarket). In comparison, among select competitors, Facebook has a P/S of 8.6 and Twitter 8.1. Its price-to-book value is 10.9 versus 5.9 for Facebook and 5.8 for the Internet Services & Social Media Industry (CSIMarket). Direct competitor Instagram is owned by Facebook. However, growth stocks commonly have higher P/S and P/B ratios.
2. Is Snap a profitable company?
Snap expects to turn a profit in 2020. Rising expenses are the biggest challenge to positive earnings generation. In Q3 2019, Snap reported its first quarter of positive EBITDA growth. EBITDA improved 65.6 percent and 15.1 percent in 2018 and 2019, respectively, to its current -$0.998 billion – the seventh consecutive quarter of year-over-year improvement. Continuing the positive earnings momentum, management expects EBITDA to increase 10–41 percent in Q1 2020.
3. What are the new augmented reality features of Lenses?
While viewing content on SnapChat, viewers can now use Scan to activate filters and lenses to learn more about a song in Shazam or search a barcode on Amazon, for example. AR Bar will dynamically invoke contextually relevant content and AR experiences. Landmarker lenses create a virtual reality experience when, for example, at Buckingham Palace or the the Eiffel Tower.
In the world of finance, investing is always considered somewhat risky, but it’s also highly lucrative. As the old saying goes, “fortunes favor the bold.” Snapchat is one of the most widely known and interesting companies to invest in.
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