Snapchat - Is It Worth $25 Billion?
It seems that Snapchat, one of Internet′s hottest start ups which last month renamed itself Snap Inc, prepares an IPO for next year March. It is said that it hopes to get the company valued at $25 billion or even more.
If Snapchat were to really move forward with such a plan, it would represent the biggest IPO on a U.S. exchange since 2014 when the Chinese e-commerce group Alibaba made its debut.
Is Snapchat worth $25 billion? Well, quite frankly I don′t know...
What we know though is the following:
Snapchat is a super popular text (called snaps), photo (often funny selfies that would disappear after some seconds), and video messaging app which young users love (incl. my two young daughters). It takes full advantage of the mega trend and business of real time visual socializing. Which in my opinion has even not yet really taken off.
As a result, by summer this year, Snapchat had surpassed Twitter in daily users with 150 million using its service (36 percent over last December). Twitter with just 140 million daily active users is stagnating.
According to some investors Snapchat expects 2016 revenue of between $300 to $350 million (this is already above its original stretch target and quite an improvement versus its $60 million in 2015). For 2017 around $1 billion. For both years these are very solid and promising figures for a company which has only started running advertisements in 2014. The company has expanded its advertising portfolio over the past year to include video ads and more sponsored geo-filters and sponsored lenses. In addition, Snapchat has started selling Spectacles, its first-ever hardware, for $129.99 (Spectacles are connected sunglasses that record video snippets that get saved to Snapchat Memories).
The company which has a very strong position within the 18 to 24-year-old demographic, i.e. with young Millennials and those in Generation Z (both very valuable target groups for many businesses) would need to significantly broaden its reach. According to various sources Snapchat still loses money; mainly as a result of its rigorous focus on revenue growth and finding ways to make money off its ever increasing user base. No doubt that it has a high entertainment value and a big potential to make money and further build its user base.
It needs to be proven that the company and its leadership team can successfully translate a very high theoretical value into a tangible financial value. The million dollar question in this respect is, if Snapchat will be able – like Facebook – to filter up from young users to their grandparents.
I guess we′ll see. Let′s wait for March 2017.
What do you think? Do you consider buying some shares?
Best,
Andreas von der Heydt
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Andreas von der Heydt is the Head and Director of Kindle Content at Amazon in Germany. Before that he held various senior management positions at Amazon and L'Oréal. He's a leadership expert and management coach. He also founded Consumer Goods Club. Andreas worked and lived in Europe, Australia, the U.S. and Asia. Andreas enjoys blogging as a private person here on LinkedIn about various exciting topics. His latest book is about what makes a future leader. All statements made, opinions expressed, etc. in his articles only reflect his personal opinion.
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A.I. Writer, researcher and curator - full-time Newsletter publication manager.
8 年Snap Inc. must do the video camera in the eye think a la Black Mirror to stand a chance of lasting. Instagram stories has 8x the engagement of a Snapchat story, that's sad, but so is the quality of visual storytelling on IG. Snapchat at least represents a UI that's native to an entire cohort, and that can be leveraged. If Facebook copied Snapchat in 2016, how can Snapchat elevate and continue to differentiate itself in 2017? Can the Spectacles be what the Apple Watch was not? The price is right at least.
Head of Operations at Sampa Explore
8 年Julio César Carro Moreno
Business Manager
8 年Ads during my conversation with other people? How company will make sure all investors of past and IPO investors get something back more than their investment?
Independent Business & Strategy Advisor
8 年Some fresh data on FB vs Snap vs Instagram: https://www.msn.com/en-us/news/technology/teens-still-love-snapchat-more-than-facebook-but-instagram-isnt-far-behind/ar-AAiXtSU?li=AA4Zoy&ocid=spartandhp