A $15 Billion Snapchat Which Plans For An IPO Has Almost A Tenth Of Daily Active Users As Facebook Inc (NASDAQ:FB)
Snapchat says it has 100 million daily active users, which is almost a tenth of the daily active user population at Facebook Inc (NASDAQ:FB). The photo sharing app said it was planning an initial public offering (IPO), but CEO, Evan Spiegel, couldn’t reveal the timing.
Snapchat may only have a tenth of the daily users of Facebook but the app is doing stunningly well on the video front. Video viewership on Snapchat is about half that of Facebook, meaning that the app has a strong competitive advantage in the video segment.
Snapchats dollar valuation is estimated to be $15 billion, although the company isn’t providing updates on its current value.
Selling ads on Snapchat
Serving ads is one thing Snapchat is trying to do carefully. Spiegel doesn’t want ads to interfere with normal user interaction on the app, which is why he at some point stated that they won’t allow brands to act like people on the platform.
Snapchat has come up with a feature that it calls Stories, which is showing success in serving ads and users already love it. The company serves curated images and videos through Stories.
Areas to watch
One of the major events that will be interesting to watch as Snapchat plans IPO is how brand advertisers will respond to the recommendation they need not act like people.
The other area of interest in Snapchat’s story is user acquisition. The app has been growing rapidly but it will have to stand up to more scrutiny and perhaps face more pressure once it goes public. Twitter Inc (NYSE:TWTR) is an example of how Wall Street pressure can alter business dynamics of Internet companies. The microblogging site is lately battling slowing user growth, and revenue has also started showing signs of weakness.
Facebook Inc (NASDAQ:FB) wanted to acquire Snapchat for $3 billion, but missed the opportunity. Instead, Facebook turned to WhatsApp for which it forked $22 billion to bring it under its wing.
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