Even at $6, Snap’s stock still isn’t a bargain, Cramer warns: ‘It’s an ill-advised decision to buy’

Snap still isn't a bargain, even at $6, says Cramer

Snap still isn’t a bargain, even at $6, says Cramer   6:48 PM ET Fri, 30 Nov 2018 | 00:51

Snap Inc.’s stock price may have fallen to just over $6 a share — down about 70 percent from where the stock started publicly trading — but even this low price shouldn’t fool investors, CNBC’s Jim Cramer said Friday.

“Do not be tempted by Snap’s $6-and-change share price. It’s not a bargain,” he warned. “At more than five times next year’s sales [estimates], you could argue it’s actually fairly expensive. And, of course, there are some alarming long-term trends here.”

For Cramer, host of “Mad Money,” the most worrisome thing about the Snapchat parent is its cash generation. When Snap went public in early 2017 with nearly $1 billion on its balance sheet, that was the last thing investors were worried about, but lately, “Snap’s cash hoard has been slowly dwindling,” he said.

Since the second quarter of 2017, when Snap had $3.24 billion in cash, its cash balance has declined by double digits every quarter, falling to $1.4 billion as of its latest quarterly report.

Worse, the company’s cash from operating activities — what its core business earns, minus some major expenditures — has been shrinking by bigger and bigger amounts. And while some of that money is being invested in growth, most of it is funding the social media company’s day-to-day operations, Cramer said.

“As we’ve watched the company struggle and the stock go into freefall, I’ve started to wonder if Snap has enough money,” he said. “Just keeping the lights on at Snapchat is costing these guys a fortune. That’s not good.”

While Snap currently has no debt, a business that drains cash instead of generating it presents a “huge problem,” the “Mad Money” host continued.

The proximate cause, he explained, is that Snap spends a fortune on the cloud: with hundreds of millions of users uploading and downloading Snapchat content every day, the parent company has to pay for the digital space.

And even though Snap’s management laid out some lofty goals for the year ahead, namely turning a profit and stemming the company’s free cash flow losses, Snapchat’s total number of daily active users is now declining, Cramer warned.

“Snap’s growth is evaporating before our very eyes,” he said.

Add in Snap’s slowing revenue growth — up 44 percent in the latest quarter, down from 72 percent in the year prior and 285 percent at the IPO — and some high-level executive departures, and Snap’s future looks murky to Cramer.

“Until Snap gives us some reason to believe in a turnaround, it’s an ill-advised decision to buy the stock,” he concluded.

Shares of Snap ended Friday’s trading session up 1.72 percent at $6.51, dipping slightly in after-hours trading.


Startup funding slows in October; RIL commits Rs 3,000 cr investment at ‘Make in Odisha’ conclave

October turned out to be a somewhat dull month in terms of funding raised, closing at just $714.13 million across 51 deals. This was just 50 percent of the funding raised in October 2017 and just over 25 percent of what was raised in September this year. While September saw larger and more late-stage companies raise bigger funding rounds, October saw more M&As, including acqui-hires. YourStory Research recorded 30 exits in the Indian startup ecosystem last month, as compared to 20 in September.

With Make in Odisha, the Odisha government is keen to put the state on the fast track to development. The state’s flagship biennial event was inaugurated by Odisha Chief Minister Naveen Patnaik at Janata Maidan in Bhubaneswar on Monday. Mukesh Ambani, Chairman and Managing Director of Reliance Industries (RIL), announced that the company will invest Rs 3,000 crore in the state over the next three years. Most of this investment is aimed at creating Odisha’s digital infrastructure.

Odisha Chief Minister Naveen Patnaik

Verizon’s media technology division Oath promoted Rose Tsou, Head of Oath APAC, to Head of International for the business, effectively making her the first person to be appointed to this newly created role. In her expanded role, Rose is mandated with driving the strategic direction of markets outside of US and Canada, including India. In a conversation with YourStory, Rose spells out Oath’s growth strategy for the Indian market, how she went on to script Yahoo Asia’s success, and what motivates and drives her every day.

Rose with Jerry Yang, co-founder of Yahoo

Amazon Pay has raised funds from parent Amazon for the second time in a month. This infusion of Rs 220 crore is the ecommerce giant’s fourth fund infusion in Amazon Pay this year. Prior to this, in October, Amazon Pay had raised Rs 590 crore. However, heavy spends on sales and promotions led to an increase of 88 percent in Amazon Pay losses in India, the company’s recent filings with the Registrar of Companies revealed.

Amazon has invested Rs 220 crore into its payments arm

Hasmukh R Patil is on a mission to make tractors – and more importantly their operation – affordable for farmers. A farmer from Mandal near Ahmedabad, Hasmukh started by using scraps and automobile parts bought from different garages and mechanics and assembled and reassembled his tractor multiple times until he got it right. He has now assembled a solar-powered tractor that will help millions of farmers bring down their cost of cultivation, and reduce dependence on expensive fossil fuels.

Hasmukh Patil, Co-founder, Saur In Autosol Energy (extreme left) & Kunjan Patel, co-founder (extreme right)

Artificial intelligence (AI) is unlikely to be a big eliminator of jobs but the technology can create new openings, according to a Gartner survey, which finds that AI eliminates fewer jobs than expected. The survey reveals AI will change the workforce but its impact will not be detrimental to all workers. People will learn how to do less routine work, the report states, adding that they will be trained in new tasks, while old tasks that have become routine will be done by machines.


Commercial real estate activity cruising at happy pace

Commercial real estate activity cruising at happy pace

The commercial real estate market is humming right now, with new users, new investors, new construction and lots of redevelopment of existing spaces in multiple places across the Grand Valley.

“People are really seeing the city’s commitment to downtown and the riverside connection,” said Brian Bray with Bray Real Estate, who recently sold a building on S. Seventh Street, between Main Street and Riverside Parkway.

“My wife liked the area down there,” said Allen Akey, who purchased the restaurant building at 811 S. Seventh with his wife, Lena Combs. “She thinks it’s going to be an upcoming, growing area.”

Akey and his wife will do an extensive remodel of the existing building, but hope to open their new breakfast and lunch restaurant, named Sunrise, by the first of the year.

Although there are commercial projects elsewhere, downtown is generating both buzz and dollars, as end users and investors revamp older buildings in hopes of generating more business and opportunities.

“I’ve always wanted to open my own bar, and more than anything, it came down to timing,” said Tim Babbitt, who is opening the Feisty Pint bar at restaurant at 359 Colorado Ave.

“It’s more of a neighborhood pub,” Babbitt said about the soon-to-open business.

Babbitt has already hired key people, who are hiring other staff members. He hopes to have the establishment open by December 1.

The city planning office is currently working with another property owner who hopes to open a brewpub on S. Second Street.

Pitkin Avenue is also seeing redevelopment with an office building at Sixth and Pitkin changing hands and getting attention from new owners, and the office building at Second and Pitkin also getting a makeover.

“It was attractive, it was downtown,” said Tony Englbrecht, one of the partners in the building at 215 Pitkin Ave., “and it was a free-standing building with it’s own parking. Downtown growth is heading south with the new hotel and renovations at the train depot.”

The historic former train depot’s owner, Dustin Anzures, is in discussion with prospective tenants, as well as contractors and tradespeople, to create the best use of the historic Grand Junction Depot building.

“We want to do the very best job we can,” Anzures said, who is looking for a local restaurant tenant to make a commitment on the location prior to finalizing plans on the building.

“We have high hopes of doing something with this building,” Anzures said, “creating something that doesn’t currently exist in the Grand Valley — a historic, landmark building that’s been repurposed. We want ours to be a happy place.”

Anzures also hopes the depot will get a safer and more pedestrian-friendly connection to Main Street and the rest of downtown when CDOT finalizes its plans for the Pitkin curve at First and Pitkin. He believes that a more pedestrian-friendly route would bring train visitors who are passing through on the California Zephyr into the more established parts of downtown. Of course, he’d also like to create great experiences for them should they decide to hang out at the Grand Junction Depot.


Q2 earnings: Titan’s consolidated profit up 8.34% at ₹301.11 crore

Revenue and profit growth were led by Titan’s largest segment, jewellery, sold mainly under the Tanishq brand.

Watches and accessories company Titan Co Ltd reported an 8.34% growth in consolidated profit while total revenue jumped significantly during the July-September quarter, led by sales growth in all key product segments.

But the Tata group company’s standalone net profit growth rate for the quarter was a muted 5% on a year-ago basis. Titan listed two reasons for that subdued growth rate – an ₹29 crore provision for investments it made as part of Treasury operations in inter-corporate deposits in the IL&FS group, and certain one-time franchisee compensations due to store takeovers in the jewellery segment.

In June, Infrastructure Leasing and Financial Services Ltd (IL&FS) group’s transport arm, IL&FS Transportation Networks Ltd (ITNL), delayed repayment of ₹450 crore of inter-corporate deposits from the Small Industries Development Bank of India (Sidbi), triggering a ratings downgrade from Icra and CARE on ITNL’s debt papers. IL&FS group and units subsequently defaulted on several other payment obligations.

Consolidated net profit at Titan was ₹301.11 crore in the second quarter, compared with ₹277.93 crore last year. Total income stood at ₹4,595.13 crore during the quarter, up from ₹3,603.01 crore in the same quarter a year ago.

Revenue and profit growth were led by Titan’s largest segment, jewellery, sold mainly under the Tanishq brand. Income from the jewellery segment grew 29.02% to ₹3,645.07 crore on an annual basis.

“The company has done well across all its businesses in the second quarter, delivering 26% growth over last year. The jewellery business picked up this quarter after a soft first quarter and the watches business had one of its best quarters with an extremely healthy growth in bottom line for the first half. The eyewear business has picked up too with our investments in brand building showing results now,” Titan’s managing director Bhaskar Bhat said in a statement filed with the BSE on Friday.