My how the mighty have fallen. At one point in time, Snap (NYSE: SNAP) and Pinterest (NYSE: PINS) were two of Fintwit’s darlings. High-growth social media apps were revolutionizing the tech industry. It’s been a tough year for both companies, as it has been for most tech stocks. Is the potential for long-term growth still there for both companies? Absolutely. But the performance of SNAP vs PINS is a cautionary tale of high-flying tech valuations getting ahead of the company’s business.
SNAP vs PINS is a battle of social media platforms. Previously known as Snapchat, Snap Inc. is an American social media company that was founded back in 2011. Its CEO is co-founder Evan Spiegel, who officially became the youngest billionaire in the world in 2015. Snapchat is a mobile-based application that utilizes the user’s camera to create short video clips.
Users can integrate augmented reality to add effects to the video, as well as adding music or other audio. The key to Snap is that the videos will delete themselves after they are viewed by the recipient.
The company has been the target of takeovers in the past. Big tech companies like Alphabet (NASDAQ: GOOGL) and Meta Platforms (NASDAQ: FB) have shown interest, but Spiegel has refused. Snap owns other intellectual property like the popular emoji maker, Bitstrips, which it has integrated into the app. Finally, in 2017, the Chinese tech conglomerate Tencent purchased a 12% stake in the company.
As for the stock, Snap has taken its shareholders on a rollercoaster ride over the past couple of years. Snap was one of the companies hardest hit by the new security features implemented on Apple (NASDAQ: AAPL) iPhones. Snap saw a dramatic decrease in its ad revenues and the stock has never recovered.
Shares have fallen by over 40% since the beginning of 2021, falling from their all-time high prices in the mid-$80’s. Is Snap destined for a rebound? One of the keys for the company moving forward will be the impending release of the Metaverse. The company should be able to utilize its augmented reality technology to be a major player in the future of the internet.
What Is Pinterest?
Unlike Snap, Pinterest is a social media platform that is based around eCommerce. While it isn’t a marketplace to directly purchase goods or services, it provides a way for users to shop around.
What do I mean by this? Pinterest is basically an online catalog of ideas. People can post things they have made or designed, but the actual transaction happens off the site. It has been likened to a digital idea board or bookmark site.
The company was founded back in 2009 by current CEO Ben Silbermann, Paul Sciarra, and Evan Sharp. It was actually based on an earlier project by Silbermann and Sciarra called Tote which was a digital paper catalog. The company went public in April of 2019 on the NASDAQ exchange, with a valuation of about $12 billion.
It’s been just as wild a ride for Pinterest shareholders. Shares of the eCommerce platform surged during the COVID-19 pandemic, nearly hitting $100 per share. A regression in new users and a lack of innovation put some investors off of the company, especially as we emerge from the pandemic.
The stock has since fallen to its current trading levels in the high-$20’s. Shares briefly spiked when it was reported that PayPal (NASDAQ: PYPL) was interested in acquiring the platform. They have since fallen back after PayPal said they were backing out of any potential deal. We’ll keep watching this SNAP vs PINS battle.
It’s not just SNAP vs PINS that we can look at. Social media is a fairly top-heavy industry, but there are some major players that have moved into the AR/VR space. Here are a couple of stocks to keep on your radar if you think Snap is a good investment.
Meta Platforms (NASDAQ: FB)
All roads in social media run through Facebook, whether you like the company or not. It is one of the six largest companies in the world by market cap and owns both the Facebook and Instagram platforms. These two account for billions of active users and throw in Whatsapp and you can see the power behind this brand. Founder and CEO Mark Zuckerberg once approached Spiegel to acquire Snap’s platform and technology.
With Instagram, Zuckerberg has integrated the same augmented reality technology for users. He also created Instagram Reels, which are Snap-like videos that users can upload directly to their Instagram accounts.
Further to this, Meta Platforms has not been affected by the Apple security features as Snap has. In an industry dominated by just a handful of brands, one has to wonder if Snap will say no if Zuckerberg comes knocking again in the future. Is FB going to take out SNAP vs PINS?
TikTok (Owned by Chinese company Bytedance)
TikTok is probably the closest direct competitor to Snap in this SNAP vs PINS post. It was created by the Chinese company Bytedance Ltd. and was named the hottest site on the internet in 2021 by Cloudflare. The company has had some controversy already, as the US accused the app of tracking American users. The American side of TikTok is now partially operated by Oracle and Walmart. President Biden has since lifted the restrictions and has started a thorough investigation into the accusations against TikTok.
TikTok is similar to Snap in that it allows users to create short video clips. They are able to add music, effects, and other augmented reality features, and post them to the platform. They have been popular as a way for celebrities to send clips to their fan bases. TikTok is not a publicly-traded company, but estimates have the company worth between $200 and $400 billion.
In this SNAP vs PINS post lets turn to Pinterest now. The eCommerce industry is much more concentrated than the social media market. Basically any site or brand has their own standalone eCommerce site now, so there is plenty of competition. While Pinterest doesn’t directly sell goods and services, it does battle these sites for traffic.
Etsy (NASDAQ: ETSY)
Etsy is an eCommerce site dedicated to people who create their own products. It is perfect for entrepreneurs and really picked up popularity during the pandemic. There have been rumors in the past about Pinterest and Etsy joining forces, but nothing has come of those.
Etsy is also expected to see a drop in traffic as the pandemic restrictions ease. The platform does allow direct transactions between the business and the consumers, with Etsy taking a cut of each transaction. SNAP vs PINS or Etsy?
Amazon (NASDAQ: AMZN)
You can’t mention eCommerce without bringing up Amazon. Pinterest does directly link products to both Etsy and Amazon so they do co-exist in a way. But Pinterest would like its users to go through its site first, which is always going to be the challenge of the platform. Amazon is the global leader in eCommerce and is one of the most valuable companies in the world. It is not surprising that Amazon has also been linked to acquiring a site like Pinterest in the past. As a result, AMZN or SNAP vs PINS?
Will the Metaverse Save SNAP vs PINS?
The upcoming Metaverse looks like it is going to provide plenty of companies with some fresh revenue streams. Could this be the case for SNAP vs PINS? Snap already has augmented reality technology integrated into its app. It also has some hardware it has used before in the form of augmented reality glasses.
This can easily be leveraged into combining the Metaverse with social media. In fact, you can argue Snap already has the foundation for the Metaverse in its existing products. Don’t be surprised if both Snap and its stock get a massive boost whenever the Metaverse comes to life.
So what about Pinterest? Well, eCommerce has already been pegged as one of the leading industries in the Metaverse. Companies like Walmart are already developing futuristic online shopping experiences for consumers. Why can’t Pinterest do the same for its users?
Browsing for ideas and products and experiencing them rather than just scrolling through them on a webpage has to be appealing. In a world where the internet will be a four-dimensional environment, Pinterest has the opportunity to provide its users with the ultimate Metaverse experience.
SNAP vs PINS? Which one of these former high-flying tech companies will be a better investment moving forward? At this point in time, it’s hard to say. Neither company has managed to reach profitability, and both have experienced a decline in active users. In their current state, both companies are also struggling to compete with larger competitors within their own industry. If I were to pick one stock, it would have to be Snap.
Personally, I think it is better suited for the Metaverse, and still has a loyal following of daily active users. Pinterest needs a lot to go right for its stock to ever return to its previous highs. Both stocks do present a potential rebound play ahead of the Metaverse launch, but both are competing in industries with some major players with deep pockets. Which stock are you looking at as a better investment moving forward?