Snap Inc., the developers of Snapchat and Spectacles are heading into the big time
This February they have announced their intention to float Snap Inc. on the stock market.
Evan Spiegel and Bobby Murphy, who invented Snapchat, are set to become multi-billionaires, their stakes worth $5 billion. Analysts have claimed this to be the biggest launch since Alibaba and Facebook. Facebook launched at a value of $81 billion in 2012. Snap Inc.’s flotation value will approximately be $20-25 billion.
Snap mentioned to the regulators in their formal announcement that they don’t expect profit
They even anticipate losses. However, Martin Garner, an analyst for CCS Insights, disagrees. He sees Snapchat as a worthy competitor to Facebook. Through both platforms revenue is primarily gained through advertising.
So far Snapchat has never made a profit. But despite losses acquired last year of $515 million, the company made $404 million. Losses occurred due to company investment into research and marketing.
Snap’s primary intention is to raise $3 billion. This will be via share sales in order to set the company’s market price. The founders will retain control of the company as purchase of shares will not include voting rights.
Currently, Snapchat has a 160 million daily user base aged between 13-24
Facebook surpasses this with 1.2 billion users. Younger users are being lured away by new social media platforms such as Snapchat and Facebook has a demographic that is aging comparatively. But it still leads as the most popular social media platform.
The biggest draw to the Snapchat platform is the imaging services, chat and messaging
Around 70% of it’s users prefer this to only 5% who use it for published events and sponsored media content.
Facebook can sense Snap is serious competition, however. Snap declined Mark Zuckerberg’s offer to buy Snapchat for $3 billion three years ago. The founders reasoned that it would not be worth the smaller short term gain.
But it is clear that Zuckerberg is attempting to competitively redevelop Instagram. Recent updates included such features as story time lines and more varied filters. These are clearly reminiscent of features found on Snapchat.
The younger generation prefer the short-lived self-deleting nature of Snapchat
This feature was the first of its kind within multi-media social media apps. Younger people prefer quicker messaging turn around as they have more active social lives. Uploading a picture with a view time of mere seconds contrasts with the long-term diary nature of Facebook. Facebook feels comparatively slow to Millennials. Spiegel created the app with this in mind.
When was Snapchat created?
Spiegel created Snapchat when he was at college at Stanford. The initial prototype began as a project for class. The concept of a selfie app that quickly deletes images was the brainchild of his classmate Reggie Brown.
Speigel fleshed it out and joined forces with coding friend Bobby Murphy. The students launched the app, then called Picaboo, from Speigel’s living room. He was still living at home with his father.
The app was swiftly renamed to Snapchat, and accumulated a user base of 1,000 daily users. By the end of 2012 this user base had grown to 100,000. After releasing it to Android, it began 2013 with 1 million daily users.
In 2013, the company started to take off but met it’s first hurdles
Brown, who had been out of the picture as the company grew in success, attempted to sue Spiegel and Murphy. They settled out of court for $157.5 million.
Later in the year a hacker leaked 4.6 million emails and usernames, and uploaded them onto the Internet. Snapchat recovered and tightened security.
New features were constantly added, such as video and chat, as the company progressed into 2014. Snapchat now had 50 million daily users, and they incorporated advertising.
It was also around this time that Zuckerberg attempted to buy the app. Snap Inc. began to branch out, acquiring Vergence Labs, developers of Epiphany Eyewear. This would develop into what would become their first hardware product: Spectacles.
Snapchat had 100 million daily users by 2015
They acquired the company Looksery in order to develop facial recognition software. An international sales office opened. By 2016 the app contained numerous unique features and daily user numbers rose to 150 million.
Spectacles launched in November of 2016, after Snapchat Inc. formally rebranded to Snap Inc. Available from vending machines and pop-up retail outlets, they retail at around $130. They work in conjunction with the Snapchat app. The glasses contain a camera that records 10 second video.
By January this year, Snap’s revenue had grown by 600%. They have also announced the set up of an international office in London, in the UK. Judging by the history of Snapchat, it is clear that the grand estimations for the future of this company are extremely positive.