Over the years since the IPO, Snap (SNAP) has made decent progress in eliminating the operating losses and cash flow burn at the social media company. Unfortunately, the company hasn't come anywhere close to eliminating losses while the stock trades up at a market valuation of nearly $27 billion now. My investment thesis remains negative on the stock at this valuation.

Core Problem Remains

The biggest issue with Snap is that the company can't match user engagement and excitement for the product with the revenues to cover the costs of delivering SnapChat. While the company has floundered around to generate nearly $2 billion in annual revenues, Facebook (FB) has turned Instagram into a $20 billion ad business.

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