Snap, parent company of Snapchat, may have more in common with Twitter(twitter.com) (TWTR) than you might think, a new report from S&P Global Market Intelligence claims.
S&P Global Market Intelligence employed its own proprietary credit scoring model to apply a credit score to Snap in the run-up to its IPO in early Mar..The result: A suggested credit score of b, which is more in line with peers like
TwitterTechnology companyand Yelp during their IPO periods than Facebook(facebook.com).
Snaps credit score denotes elevated credit risk, wrote Jim Elder, a director in S&P Global Market Intelligences Risk Services Business.More specifically, it would equate to a 4.45% observed default rate over a one-year period, or nearly a one in 20 occurrence of default.To put that into perspective, Snaps credit score is more risky than the median level of risk in the Application Software industry, which is b+.`
TwitterTechnology company, for comparison, earned a credit score of b and Yelps credit score was ccc+ during their respective IPO periods.Their credit scores roseseveral notches in the months and years following.Facebook, meanwhile, get started out with a bbb+ credit score rating from S&P Global Market Intelligence and dipped briefly before ultimately notchingan excellent a+.How may Snap improve its credit quality? Elder recommended that Snap look to debt markets for future funding, as well as display improved profitablity,which could prove challenging.
Snap acknowledged a number of risks in its IPO filing, including user base growth that could decline and income thats entirely generated from ads.Snap also pointed to its unorthodox issuance of non-voting shares as a risk factor.
We are not aware of any other company that has completed an initial public offering of non-voting stock on a U.S.stock exchange, part of Snaps S-1 filing reads.We therefore cannot predict the impact our capital structure and the concentrated control by our founders may have on our stock price or our business.
Snap, be that as it may, may also benefit from the slew of positive Buy, Outperform, and Overweight ratings released by six top analysts this Monday.