This March Snap, Inc. went public. Even though, that the company is still unprofitable, Snap's IPO is the largest U.S. tech company IPO since Facebook went public in 2012 year. Snap attracted $3,4 billion, while the company's valuation was $24 billion. The share price on the first day of trading on 44% exceeded the placement price, and the company's market capitalization was $28 billion.
The Snapchat app was launched in 2011 year and was positioned as a messenger with disappearing messages. Founder and CEO Evan Spiegel called Snap a "camera company" in the first place («Camera Company»), despite the presence of many other functions of the social network and messenger.
However, following the results of the following months, the company showed modest operating and financial results.. IN 1 kV. 2017 G. Snap recorded a net loss of $2,2 billion, most of which were provisions for employee benefits in the form of stock options for IPOs, and the share price on the first day after the announcement of the results fell by 23%. Despite a slight increase in the number of active users per day (daily active user, DAU) and an increase in average time, carried out by the user in the application, revenue figures were modest, especially the reduction by 14% average revenue per user (average revenue per user, ARPU) to $0.90 (for example, у Facebook ARPU составляет $4,23). In this way, aggressive goal to achieve in 2017 G. revenue in $1 billion, announced by Snap before the IPO, seems less and less achievable.
Following the release of the company's quarterly results, many analysts compared Snap's share price decline to Facebook's post-IPO share price dynamics.. Placing Facebook shares in 2012 year became the largest IPO of a US technology company, the placement price was $38 per share, however, over the next months, it plummeted by more than half. Five years later, Facebook is the largest social platform with over 1,28 billion. DAU and one of the largest technology companies in the world, and the share price exceeds the IPO price by more than 4 Times.
Certainly, Snap went public much earlier in terms of profitability than most comparable tech companies. Besides, since the company has not yet found its business model and is at an early stage of development, the range of possible development scenarios for the growth of the number of users, marginality and future strategy is very wide. The current valuation of the company reflects the expectation of high quality execution of the stated growth strategy, laid down by investors in the price.. but, at the moment, not many indicators indicate that, that the company will be able to achieve its goals. And it's not just Q1 results that are worrying.
Unique user base and potential for advertising revenue growth
Snap has managed to attract a very young and loyal audience: 86% пользователей Snap моложе 35 years, wherein 35% пользователей Snap в США не являются активными пользователями Facebook и 46% — Instagram.
Indicative, that even Facebook's attempts to "pull" users to itself have not yet been crowned with success - so, запуск Instagram нового продукта, copying Stories by Snap, did not significantly affect the engagement of Snap's existing audience, согласно данным SensorTower.
At the same time, it is worth paying attention to the popularity of social networks among teenagers in the United States.. If in the spring 2015 G. only 11% teenagers preferred Snap and the company was content with only 4 place after Facebook, Instagram и Twitter, then later 2 of the year the situation has changed dramatically and Snap is confidently leading - 39% of respondents prefer this platform to other social networks.
One of the problems in Snap's ad business today is the lack of data on the performance of current ad formats., which is expressed in the reluctance of many advertisers to direct their marketing budgets to the platform, taking into account this uncertainty factor. However, provided, that Snap will be able to retain existing large advertisers and user engagement will not drop, significant growth in advertising revenue can be expected in the future.
Growth in the number of users
Gaining popularity among millennials, Snap doesn't stop there, as in order to maintain the growth of advertising revenue, the company must ensure a stable growth of the user base. At the same time, it will be difficult to achieve growth., if you do not go beyond this demographic group, which is confirmed by the results of the company for 1 kV. - DAU increased by only 5% по сравнению с прошлым кварталом и составил 166 млн пользователей в 1 kV. 2017 G.
According to DAU Snap is inferior to its rivals Instagram (200 million) и Facebook (1,28 billion), and for social media, scale is a significant competitive advantage, which determines the value of the business as a platform.
Comparing the growth rates of the same three, we see, that Snap's growth rate is significantly lower than that of Facebook and Instagram. Although there is a correction to be made here, that Instagram is largely growing by being "fueled" by Facebook's giant audience.
Snap management understands, that it will be difficult to achieve the same rapid growth in the number of users as in the established Facebook, therefore the company is trying to develop not in width, increasing the user base, and deep, working on improving current and launching new products. Here we must pay tribute to the team, which more than doubled the number of launched products in a year since 2014 on 2016 yy. At the same time, it is not so important, that these chips were not developed internally, but were the result of acquisitions (как в случае с Bitmoji) or established partnerships (for example, с Shazam), - main, that Snap continues to experiment and improve its product, unlike some of the larger competitors, who have recently chosen the strategy of copying products of other companies.
Product exclusivity and competition
The exclusivity of the Snap product has not been disputed for a long time - this is confirmed by the loyalty of a large user base, and repeated attempts by competitors to acquire Snap.
Многие пользователи приложения Snap особенно ценят то, that the service allows them to communicate with friends in an easier way than other platforms: исчезающий контент (the ability to see messages only for a short time) reduces the requirements for its quality and thus creates a more relaxed atmosphere of communication.
Основатель Facebook Марк Цукерберг оценил масштаб Snap еще на этапе становления компании — он безуспешно пытался приобрести платформу за $3 billion. in 2013 G. The offer of the Chinese TenCent was $3,5 billion. (according to ValleyWag), Google тоже не хотел остаться в стороне и предложил $4 billion. in 2013 year. However, Evan Spiegel did not accept any of the purchase offers and decided to list the company..
Nevertheless, Snap product is not unique and cannot be copy protected. In support of this thesis, not wanting to miss out on a segment of the market, on which Snap is running, Facebook changed strategy, started copying Snap's products and launching them on her Instagram. At the same time, the implementation period of the copied products was significantly reduced - if it took Instagram to launch Stories 2 years and 10 Months, то аналог продукта Create-Your-Own-Stickers команда Instagram запустила лишь за четыре месяца.
Understandably, that Facebook and her "daughter" Instagram started copying not from a good life, and in order to support the growth of indicators of their platforms. So, по данным The Information, number of posts by users with unique content (do not repost links to articles on other resources) on Facebook fell on 21% between the middle 2014 in the middle 2015 yy. and more on 15% in the middle 2015 to April 2016 yy. The same dynamic was observed in relation to the exchange of personal content on Instagram..
Where will Snap develop??
Сейчас можно выделить три направления, where Snap develops:
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advertising business,
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original content,
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content creation methods.
IN 2016 G. 96% Snap's revenue came from ad product revenue - included as payments from brands, acting as "sponsors" of geofilters and lenses, as well as receipts from such formats, as video ads, articles and others.
Snap, probably, will continue to build up advertising inventory on the platform as a result of audience growth, and by developing new ad formats. One of the directions, to which the company pays a lot of attention, this is the launch of new products in the field of augmented reality (Augmented Reality или AR). This is a popular technology, which many large companies are now actively trying to implement, for example, Facebook и Apple, in the hope, that new ad formats with AR elements will significantly increase mobile app revenue. Advertising with AR elements can create a sense of connection between the real and virtual worlds. Snap gets most of its ad revenue, offering various promotional products such, как формат вертикального полноэкранного video или спонсируемые художественные инструменты (for example, Geofilters and Lenses).
The second important source of future growth for the company will be the development of original content., which will increase audience engagement on the platform, and also attract new segments of users. Snap creates a new TV format, which are based on short TV shows. In March 2017 G. стартап запустил шоу о политике «Good Luck Ameria» с бывшим ведущим CNN Питером Гэмби. Также стартап работает над созданием коротких программ с такими партнерами, as Vice Media, ABC News, BBC and National Football League. NBCUniversal Shows Serious Intentions to Snap, которая инвестировала $500 млн в ходе IPO компании-камеры.
AND, finally, the company will continue to work on simpler ways to generate content. This includes as revenue from hardware products (for example, glasses and drones), and the launch of new software products (new generation of AR filters). So, in February 2017 года Snap выпустила очки (Spectacles), а также недавно приобрела стартап Ctrl Me Robotics, who is developing a small drone for video recording.
Long term strategy
Usually, in the long term, non-grocery companies are more likely to succeed, focused on the release of individual products or services, and companies, managed to create platforms. Investors rated Snap at almost $30 billion. because, that they see it as a platform with more than 160 million active users.
One of the most important questions, standing in front of Snap, - how to make a significant leap in platform development, while maintaining the growth rate of the audience and its loyalty. As the practice of competitors shows, marginal improvements to existing products provide only short-term benefits, Snap will have to prove, that the company is capable of innovating, которые сложно скопировать и которые защищены патентами.
a source : http://www.forbes.ru/tehnologii/345739-snap-o-chem-govoryat-rezultaty-pervogo-kvartala
