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Snap’s Big Tax Break

The flurry of early interest in Snap’s IPO has passed and longstanding questions about the company's prospects now appear to be dominating trading. These include slow user growth and lack of profits, explaining why Snap stock is down more than 15% since the offering.

But there is one positive that hasn’t received much attention: When Snap does finally turn profitable, it won’t have to pay taxes for a good long time.

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Still, there’s a decent chance Snap will finally start making money. And the tax break on its stock awards will grow sharply in coming years, given the RSUs yet to vest.

Michele Clarke commented on this article.
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Snap, in contrast, has never yet turned a profit and isn’t expected to do so for several more years. And the tax break is only valuable when it starts making money on which it has to pay taxes.