RiverPark Advisors, LLC an independently-owned investment firm, recently published its first-quarter RiverPark Large Growth Fund commentary – a copy of which can be downloaded here. During the first quarter of 2020, the RiverPark Large Growth Fund returned -14.9%, compared to the total return of -14.1% by the Russell 1000 Growth Index and -19.6% by the S&P 500 Index.
In the said letter, RiverPark Advisors highlighted a few stocks and Snap Inc (NYSE:SNAP) is one of them. Snap is a social media company based in California. Year-to-date, SNAP stock gained 4.4% and on May 1st it had a closing price of $16.79. Its market cap is of $24.6 billion. Here is what RiverPark Advisors said:
“Snap is known for its mobile-only picture and messaging application Snapchat. Snapchat reaches 90% of 13-24-year-olds in the US and has 218 million Daily Active Users who spend about 30 minutes/day on the platform producing more than 10 billion daily video views.
We expect SNAPs average revenue per user (ARPU) to grow from its current $8 per year to more than $20 by 2023. For reference, Facebook generates a $50 ARPU and Twitter $25. Increasing users, engagement and ARPU should drive a 35% revenue CAGR through 2023, as well as expand gross margins from 56% for 4Q19 to 80%. We believe that the combination of continued strong growth in user engagement with increasing monetization will lead to a period of sustained and highly profitable growth for the company over the next several years.”
RiverPark Advisors comments on Pinterest
In the said letter, RiverPark Advisors also highlighted Pinterest Inc. (NYSE:PINS) stock. Pinterest engages in the operation of a pinboard-style photo-sharing website. Here is what RiverPark Advisors said:
“Pinterest is known for its pinterest.com website where people post pictures or “Pins” and view them to share ideas on a wide range of topics. Pinterest has more than 335 million monthly active users (MAU), 47% of total internet users in the United States, 2/3 of whom are female. The company reaches eight out of ten moms and half of all U.S. millennials ages 18-34. These users are coming to Pinterest to get inspiration for their home, their style, or upcoming travel, which often means they are actively looking for products and services to buy.
The company is still in the early stages of building an advertising product suite that fully taps its extremely attractive customer demographics. PINS’ ARPU was $3.73 last year, significantly less than SNAP’s $8, Twitter’s $25 and Facebook’s $50. PINS’ ARPU increased 15% for 4Q19 and we expect it to continue to close the gap. MAU are also growing, up 26% for the fourth quarter to 335 million, driving 46% revenue growth. Increasing users and ARPU should drive 30% revenue growth for years to come, as well as expand gross margins from 69% last year to 75%- 80% and improve operating margins from currently negative to more than 25%.”
Disclosure: None. This article is originally published at Insider Monkey.
