“Shares of camera company Snap jumped in Thursday’s pre-market session after a Vanity Fair article suggested that the company could be acquired by Apple,” Bill Maurer writes for Seeking Alpha. “While I’m sure that people who bought Snap after its IPO and in the $20s certainly hope this is the case, I just don’t see the technology giant making this sort of move.”
“Apple likes to buy small, non-public companies. Given Snap’s current market cap of about $22 billion, you are likely talking about a deal price that approaches or perhaps even exceeds $30 billion,” Maurer writes. “While Snap’s latest quarterly report sent shares soaring, it is still losing a ton of money and blowing through lots of cash. The roughly $2 billion that analysts expect in revenues for Snap next year isn’t even 1% of what Apple does currently. It would force a downward revision in Apple EPS estimates, not only from Snap’s net losses but the reduced buyback potential from the huge deal cost.”
“A deal of this size, likely at least in the $30 billion range, would be unlike anything Apple has ever done,” Maurer writes. “For that price tag, Apple can continue to do what it does best, which right now is capital returns and acquiring smaller, non-public companies, as well as investing in its current AR efforts.”
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MacDailyNews Take: Whenever news lags or some company gets desperate (or Kylie Jenner tweets), the “Will Apple buy [blank]?” articles sprout up like weeds.
Will Apple buy Snap? – March 8, 2018
Kylie Jenner tweet wipes $1.3 billion off Snapchat’s value – February 23, 2018