Snap (SNAP) earnings preview: focus on user and revenue growth

Snap's competition, which includes Facebook with nearly 2 billion users, is overwhelming. In particular, Instagram, owned by Facebook, may emerge as a substitute for Snapchat. The larger ecosystems of Snap’s competitors may have also created somewhat of an exit barrier for their users, which could further limit the growth acceleration of Snapchat users.

While digital ad budgets continue to grow, so does the number of ad inventory providers in the space. There is no guarantee that a larger portion of new digital ad dollars will flow to Snap. Facebook and Alphabet’s Google, which have proven the value of their ad inventories to advertisers over the years and together dominate the market, will probably continue to take more digital ad dollars over time.

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