snap crackle pop 👻
Snapchat creator files for a $3 billion IPO
Five years after the launch of Snapchat, Snap is planning to go public. The company filed for an initial public offering on the New York Stock Exchange today, picking the ticker symbol "SNAP." The...
On average, 158 million people use Snapchat daily, and over 2.5 billion Snaps are created every day.
What did you think of this line:
Our strategy is to invest in product innovation and take risks to improve our camera platform. We do this in an effort to drive user engagement, which we can then monetize through advertising. We use the revenue we generate to fund future product innovation to grow our business.
Here's an interesting line:
We compete for engagement in an environment where anyone can distribute products instantly and often at no cost to the user. We think the best way to compete is to make great products that people will want to use. As such, we invest heavily in product innovation in an effort to drive user engagement. Since we monetize primarily through advertising, incremental user engagement also means increased advertising inventory.
We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability.
Let's look at it another way, do you want to invest in a company where it costs you $1.12 to make $1.00? If so, Snap is right up your alley.
Here's an interesting tidbit (sorry for the long quote):
Moreover, the majority of our users are 18-34 years old. This demographic may be less brand loyal and more likely to follow trends than other demographics. These factors may lead users to switch to another product, which would negatively affect our user retention, growth, and engagement. Snapchat also may not be able to penetrate other demographics in a meaningful manner.
For example, users 25 and older visited Snapchat approximately 12 times and spent approximately 20 minutes on Snapchat every day on average in the quarter ended December 31, 2016, while users younger than 25 visited Snapchat over 20 times and spent over 30 minutes on Snapchat every day on average during the same period.
Check out this gem:
For example, Instagram, a subsidiary of Facebook, recently introduced a “stories” feature that largely mimics our Stories feature and may be directly competitive.
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The feature has been a hit with Instagram’s users: 150 million people use Stories every day.
It actually reminded me of this part of the S-1:
Additionally, in mid-2016, we launched several products and released multiple updates, which introduced a number of technical issues that diminished the performance of our application. We believe these performance issues resulted in a reduction in the growth of our Daily Active Users, particularly among Android users and regions with a higher percentage of Android devices. Finally, we also saw increased competition both domestically and internationally in 2016, as many of our competitors launched products with similar functionality to ours.
Second; no matter which way you swing this, this is not good. If Snap is mostly telling the truth, then their engineering/deployment chops are so bad that they pushed out an update that totally screwed their metrics and relationship with these users. If they are not telling the truth, then it means that one quarter of Instagram Stories was enough to make a gigantic dent very quickly.
Our global average revenue per user, or ARPU, in the three months ended December 31, 2016 was $1.05, compared to $0.31 for the same period in 2015. In North America, our ARPU in the three months ended December 31, 2016 was $2.15 compared to $0.65 for the same period in 2015.
For 2016, worldwide ARPU was $15.98 , an increase of 34% from 2015.
Our two co-founders have control over all stockholder decisions because they control a substantial majority of our voting stock. The Class A common stock issued in this offering will not dilute our co-founders’ voting control because the Class A common stock has no voting rights.
Under the terms of his offer letter, Mr. Spiegel will be granted an award of RSUs for shares of Series FP preferred stock representing 3.0% of our outstanding capital stock on an as-converted basis on the closing of this offering...
1) The guys who are currently invested in Snap (the VCs and institutional investors) need an exit. If you're Benchmark VC and you've also invested in Uber and WeWork and all these other big "startups" that refuse to go public, you need an exit to get some money in the door so you can cash out and move on. Of course you're going to approve whatever the CEO wants so you can get your liquidity event.
2) So few companies have gone public this year that investors need somewhere to put there money to get some upside, and this is possibly it.
3) The Facebook FOMO is very real. People want to believe that Evan Spiegel is the next Mark Zuckerberg and are chasing that return. Plus I'd suspect that a lot of the investors looking at this deal are a little older and don't totally get the app so they just assume it's some phenomenon they don't totally understand.
This IPO is going to test if what Snapchat is doing can be a standalone business or just another bolt on feature to the Facebook machine.
The first version of Snapchat unlocked an explosion of creativity because deletion by default, our internet-connected smartphone Camera, and new Creative Tools gave our community a visual voice to express themselves in the moment. We learned that creativity can be suppressed by the fear of permanence, but also empowered through ephemerality.