The IPO Filing
Snapchat’s S-1 filing with the SEC revealed lots of information about the company and its business. Here are 10 of the most interesting titbits.
Although there is already a lot of hype about Snapchat and there is sure to be more over the coming months while it does its IPO roadshow to sell itself to Wall Street, there are 4 questions they need to address with investors.
Its initial public offering will be closely watched in light of how successful social-media forerunner Facebook turned out to be on Wall Street compared with Twitter, which has struggled among investors due to lagging user growth. Whether Snap is the new Facebook or the new Twitter—or something completely different—will almost certainly be more than just a footnote when the next chapters of digital media history are written.
The knives are out for Snap as the company preps for an initial public offering this week — a textbook backlash that big tech companies from Facebook to Twitter to Google have now grown accustomed to.
Snapchat’s S-1 filing with the SEC revealed lots of information about the company and its business. Here are 10 of the most interesting titbits.
Now that Snap is a public company, not only will it have to live up to its valuation, but it will also have to continue to drive user growth, engagement, and revenue.
Snapchat parent company Snap reported its first quarterly earnings today after a much-hyped IPO earlier this spring. Analysts and investors wanted to see if Snapchat demonstrated any growth after spending a year facing down an all-out attack by Facebook (and whether Snap CEO Evan Spiegel would even comment on his company’s growing rivalry with Mark Zuckerberg’s company).
For a long time, the company sat on such data and focused on creating a unique experience for its youthful user base while limiting options for marketers and being incredibly selective in which brands it allowed to advertise on it platform.
However, to stay competitive post-IPO, Snap needs to not only maintain and grow its user base but also convince marketers of the value of advertising on the platform
“So maybe Snap goes public now and goes on to be a great success…or maybe they wait two years to get it right then go public and go on to be a great success…or maybe they go public now and don’t figure it out and end up burning $25B of retirement savings of hard-working Americans who can’t afford more hurt.”
As if Snap wasn’t feeling enough heat, Facebook’s strong second quarter earnings should turn the flames up a bit higher.
Snap won’t report its own earnings until August 10. But on Wednesday, Facebook said revenue rose 44.8 percent in the three months ending June 30. That’s slower than the 59 percent growth rate from the same period a year ago but still big for a company the size of Facebook.
The image messaging app’s valuation skyrocketed in one of the tech industry’s most anticipated IPOs. Here’s how it got there. (Video)
In light of Snap’s IPO, there has been an immense amount of speculation about the long-term viability of the company’s strategy. Two elements of it have caught some attention: Snap’s statement that it is a “camera company,” and its intention to reinvest its revenues in developing new products that will take significant time and expense, but which it believes it can develop faster than competitors.
When you crunch the numbers of Snap’s valuation, the implied future profits for the company compare with Facebook, not Twitter. There is a big disconnect between the current valuation and the fundamentals, and this disconnect makes Snap a very risky investment.
While it’s too early to know exactly what will happen to Snapchat, going public is a significant milestone. Here are nine public companies that Snap is more valuable than on its first day as a publicly traded company.
Snapchat In Different Regions
Snapchat’s parent company, Snap, recently IPO’d with unprecedented media coverage in the West.
In Asia, however, coverage was much lighter as the app has not enjoyed the same cultural impact in the region as it has in the US and Europe. Does this mean that Asians are oblivious to a future trend – or has Snapchat missed its chance to win over the region’s 1.8 billion internet users?
Snapchat is pushing further into European markets, and Germany is a big priority. But growth there won’t be easy.
What works in the U.S. and Britain doesn’t necessarily fly in Germany, where business executives can be more risk averse. And defaulting to Snapchat’s success in the U.S. doesn’t cut it with all publishing and media agency execs in Germany. There, they expect more local expertise and more clarity on audience numbers.
Snap, Inc. is building a presence in China despite the fact that its Snapchat app is banned in the country, according to a report from CNN. Snap’s Chinese operation will reportedly focus on Spectacles. The company already assembles the video-recording sunglasses in China, but the new recruits will focus on research and development.
In June, Snapchat acquired location-based data company Placed to beef up its measurement tools that help advertisers know if their digital ads actually persuaded someone to a store. Now, a new campaign for STX Entertainment gives a peek at how Placed will become a revenue opportunity for Snap.
Snapchat parent company Snap is busy scaling its ad business in the giant U.S. market, while also building a global business. In the U.K., Snapchat’s first international market, the platform has doubled its headcount in the past six months, now boasting 40 sales people calling on agencies and brands in London, and around 115 people total, according to sources.
As Snapchat gears up to go public tomorrow morning and start trading on the New York Stock Exchange, WPP chief Martin Sorrell sees the app as a legitimate competitor to Google and Facebook for its ad dollars.
Is investing in Snap still a tremendous act of faith in Evan Spiegel and CTO Bobby Murphy? Absolutely — especially given their control of the company.
But if we put aside short-term volatility and focus instead on viable paths for Snapchat to extend its core appeal to users with products that unlock a new frontier of interaction, it becomes apparent that there is tremendous value yet to be unlocked by Snap Inc.
Snapchat’s IPO filings showed that its own growth has already started to taper off, and that it lost over $500 million in 2016. That leaves potential investors with a big question about what sort of trajectory Snap is setting out on: Will it be the next Facebook, a humble startup turned massive, revenue-generating cash cow? Or will it be the next Twitter, a company that can’t seem to grow or make money?
Despite all the buzz around it and a heady IPO, some industry observers are asking if Snapchat’s glory days are over. Columnist Laura Collins looks at what the future has in store for the social media network.
How Are Other Social Networks Competing?
Since Instagram Stories launched in August 2016, the feature has garnered 150m daily users – the same number Snapchat reported for the entirety of its app in June.
Ahead of Snapchat’s highly anticipated IPO, there have been suggestions that the platform’s popularity is dwindling in light of Instagram’s success.
So, is this really the case? Here’s a quick look at how the platforms have evolved since last summer.
Facebook Inc.’s Instagram is adding on yet another feature found in Snap Inc.’s popular rival, Snapchat. You can now place stickers on top of photos and video shared with friends in the Instagram Stories section of the app.
BBC News is getting more ambitious with off-platform distribution, particularly for video. But for now, that strategy is fixed on Facebook, Instagram and Twitter, not Snapchat.
The broadcaster has long been prolific with tools like Facebook Live, but Instagram is now a bigger focus, with a following of 3.8 million and climbing for its BBC News account. Since Instagram upped the maximum length on a video from 15 seconds to one minute 15 months ago, more publishers have prioritized video over photos on the platform.
Instagram Stories now has 250 million daily active users as of June. Its main competitor Snap just has 166 million daily active users, as of its last earnings report in May.
Instagram is luring advertisers onto its platform by giving them free trials and credits. While credits and trials are not unheard of, advertising executives say that Instagram is using them at an opportune time to strike Snap at its weakest.
Instagram Stories has blossomed from a Snapchat clone into an integral part of the world’s largest dedicated visual communication app in the first year since its launch. Half of the businesses on Instagram produced a story in the last month, and it’s boosted the app’s average usage to 32 minutes per day for those under 25, and 24 minutes per day for those 25 and up.
Hubspot asked marketers how their use of snapchat had changed since the introduction of Instagram Stories. Here, they share some of marketers’ biggest reasons for why they prefer each platform.
Nothing is forever in the world of platforms. Two years ago, publishers that didn’t have a coveted slot in the Snapchat Discover section were scrambling to use individual accounts on Snapchat to connect with millennials in a raw, personal way, sometimes posting as often as several times a day there.
Today, parent company Snap is facing questions about user growth and retention, with all the moves Facebook’s Instagram is making to copy Snapchat’s features, as its declining stock price shows. Instagram’s moves are paying off with publishers, many of whom have shifted their enthusiasm to Instagram.
Eight months since Instagram rolled out its Stories feature and just over a month since it launched ads on it widely, it has already surpassed Snapchat. The feature not only has more people using it daily (200 million versus Snapchat’s last reported 158 million) but is also increasingly attracting more ad dollars. Agencies tend to drift where the action is, and, right or wrong, the general feeling is Instagram is on the upswing while the early buzz over Snapchat is fading.
The disappearing-message service kept it tough for users to measure their audience. Facebook’s service swooped in.
Snapchat was flying high in early 2016, but the launch of direct competitor Instagram Stories coincided with a massive drop in how fast Snapchat was growing, judging by new stats in its IPO filing. That aligns with our report that multiple analytic providers and social media talent managers saw a big decline in Snapchat usage after Instagram Stories came out.
Facebook Inc.’s attitude toward younger competitor Snap Inc. seems to be: we can’t have you, so we’ll create our own versions of you. Ever since Snap turned down a $3 billion Facebook acquisition offer in 2013, the social media giant has churned out copycat features and full clones of Snapchat.
Facebook’s latest, more effective strategy involves integrating Snapchat’s disappearing photo-sharing tools into its already popular apps. The Instagram version of Snapchat stories, which lets people broadcast photos and videos that disappear after 24 hours, already has 150 million daily users. WhatsApp is trying the same with an update to its “Status” feature this week.
With Snapchat parent company Snap Inc. going public today, analysts everywhere have weighed in with forecast and think pieces. But what about its potential for future client work? Adweek spoke to three digital shops for their takes on the platform.
Older users shouldn’t feel bad. Maybe Snapchat just wasn’t intended for them.
After all, they’re not in Snapchat’s target audience.
Spiegel and Snapchat co-founder Bobby Murphy want to retain management control of their company.
As Facebook has transformed from a slightly wild place to a communications tool for parents, teachers, and heads of state, Snapchat’s more playful ethos, and the fact that anything posted on it disappears in 24 hours, has made it the looser, goofier social network.
Snapchat isn’t just a great way to shoot and share selfies, as it’s usually described. It’s also the first truly natively designed mobile video player, too. In fact, Snap designs everything from the UI to its own content to make sure that watching it is as mindless as possible
No matter what happens next, beginner investors who bought shares of the company should be proud that they got started investing in stocks and—provided they stick with it—stand to learn a lot about investing.
As for what those lessons will be, that’s going to depend on whether or not Snap succeeds as an investment. Let’s take a look at three potential lessons from two possible futures.
If Snapchat’s growth remains slow, it needs to maximize how much it can charge per ad by demonstrating they inspire purchases and physical store foot traffic. So today, Snap confirmed to TechCrunch that it’s acquired location-based analytics and ad measurement startup Placed for an undisclosed sum.
Placed will help Snap scale its measurement systems like Snap To Store so advertisers can chart how online Snapchat ads translate into offline return on investment. GeekWire broke the news earlier today.
Snap Inc. has hired Jennifer Park Stout, who is currently deputy chief of staff to the Secretary of State, to be its new head of global public policy. Stout’s job change was noted on her LinkedIn. Snap confirmed to Business Insider that she will be joining the company.
Facebook has spent the better part of a year copying key aspects of Snapchat’s products; now it seems Snapchat is returning the favor. The “camera company” announced today that it is revamping the way users search for Stories—the daily photos and videos that people and brands post to their accounts—as well as opening up a new advertising revenue stream.
At Snapchat, secrecy and upheaval come with the job. Evan Spiegel, the 26-year-old cofounder and CEO, moves across the company’s network of Venice Beach outposts in a black Range Rover, flanked by his security detail. New employee orientations begin with a Fight Club-like list of forbidden topics of discussion. And internal projects blossom out of nowhere — and vanish suddenly — without explanation
Lightspeed Venture Partners Managing Director Jeremy Liew discusses Snap’s trading debut on the New York Stock Exchange, his investment in the photo-sharing mobile app and his relationship with the company’s co-founders Bobby Murphy and Evan Spiegel. He speaks with Caroline Hyde on “Bloomberg Technology.”
Given that nearly two-thirds of users skip ads on Snapchat, agency executives think that it should take a page from the likes of YouTube and Instagram, monetizing the influencer marketing community on the platform.
Wall Street investors seem undecided about whether Snapchat is indeed the wave of the future or just a flash in the pan.
But one month after its IPO, the messaging app’s execs are doggedly focused on broadening Snapchat’s appeal to brands—notably direct response-minded companies.
Snapchat is a wonderful platform that owns the hearts and minds of a generation. There is a tremendous amount of value there. But with a tanking stock price and a strategy that is in disarray, it is primed for a takeover.
Snapchat soared because it followed intuition over data. That may also be its downfall.