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Snapchat just spent $100 million to acquire a tech startup to help its advertising campaigns. But the acquisition by Snap Inc. (NYSE: SNAP) is more desperate than savvy, which is why Facebook Inc. (Nasdaq: FB) remains our top pick for social media stocks…
On Nov. 3, 2017, Snap acquired Metamarkets, a startup that measures the effectiveness of advertising campaigns, for just under $100 million, according to TechCrunch.
Metamarkets' technology allows advertisers to receive real-time data streams of how their paid advertising efforts are performing, and Snap's newest acquisition also boasts Twitter Inc. (NYSE: TWTR) as a client.
The data helps advertisers know if they should pull ads or put more money behind them, and Snapchat hopes this can help it further monetize its app.
There aren't a lot of details about the deal so far.
But what we do know is this helps confirm our bold Facebook price prediction that shows gains of 38.50% are on the way by 2020…
Snapchat Can't Compete with Facebook as It Nears Our Bold Price Target
Snap will announce its earnings today (Nov. 7) after the closing bell, and it could be a rough quarter.
Snap is projected to report negative earnings per share (EPS) of $0.33 on $235.98 in revenue, according to FactSet.
And if it misses expectations, the Snap stock price could fall double digits…
For its Q2 earnings, Snapchat reported on Aug. 10 negative EPS of $0.16 on $181.7 million in revenue.
Wall Street was expecting a loss of $0.14 on $186.2 million in revenue. That sent the SNAP stock price down from $13.58 per share on Aug. 10 to $11.49 per share on Aug. 14, a 15.39% drop in four days.
But investors will also be paying close attention to Snapchat's advertising revenue, and they might get some bad news…
On Oct. 2, data firm eMarkteter revised its overall ad revenue projections in 2017 for Snapchat down from $1 billion to $774 million.
"Despite all of its improvements in ad products and measurement, Snapchat remains in the experimental bucket for many marketers," according to eMarketer. "They [marketers] give it high marks for its creative possibilities and its ability to attract a youth audience, but many have yet to make it a must-buy."
The acquisition of Metamarkets so close to the earnings report could be a sign eMarketer is right to lower its ad revenue projections for Snap.
If the Q3 2017 earnings report falls short of expectations, Snap could point to Metamarkets as a way it's going to attract more advertisers with advanced advertising data.
But this is merely wishful thinking for Snapchat, and investors hoping to profit from the social media revolution will need to look elsewhere.
And the best stock to profit from the social media industry is still Facebook…
On Nov. 1, Facebook crushed Wall Street's expectations for its Q3 report. Wall Street expected CEO Mark Zuckerberg's company to report EPS of $1.28 on $9.84 billion. Instead, Facebook reported $1.59 on $10.33 billion.
That's a 24.21% EPS beat and a 4.97% beat on revenue.
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Advertisers want to reach the most users possible, and Facebook is the best social media platform to do that.
Facebook boasts 1.37 billion daily active users and 2.07 billion monthly active users. Snapchat's 173 million daily active users simply can't compete.
And thanks to the visionary leadership of Zuckerberg, the Facebook stock price is going to keep climbing – and netting our readers double-digit gains along the way…