Following its first day of trading, the Snapchat IPO has far exceeded expectations. Opening the day at $24 per share and closing at $24.48 per share, Snap’s market capitalization is $33 billion, much higher than the anticipated $22 million it had been chasing with an estimated share price of $14-16. Snap seems to be alive and well from a financial perspective, signaling that despite slowing growth numbers, Snapchat is sticking around. For now, anyway.
via Yahoo! Finance
Additional Snapchat IPO Day One Posts:
Prior to the IPO, there was plenty of talk about Snap’s health as a company. It reported a $515 million net loss last year and it’s growth numbers stagnated in the fourth quarter thanks, in large part, to the introduction of Instagram Stories. By some measures, Snap looked to be in trouble, quickly losing its hold on the core pillar of its business: ephemeral messaging.
But Snap rebranded, calling itself a camera company. Though Snapchat is still at the core of Snap, that may not always be the case. Over the last several weeks, rumors have swirled about other products that Snap might be building and developing, chief among them being a Snapchat Phone and a drone. It’s impossible to say for sure whether or not Snap’s it decision to look ahead and beyond Snapchat that bolstered investor confidence, but it seems likely.
One thing seems eminently clear: The days of Snap being just Snapchat feel numbered. In order to survive post-IPO, Snap is going to have to innovate, and all signs point to that innovation happening in hardware.
It’s worth noting that even in light of a wildly successful IPO, Snap’s outlook isn’t purely sunny from here on out. In fact, Twitter had a very similar IPO, opening at prices way above the target share price and closing with a $24 billion valuation that was a full $10 billion higher than expected. Here’s how Snapchat’s forecasted IPO stacked up against Facebook’s and Twitter’s:
Though opening so high above its estimated share price sounds impressive (and it is), it’s not necessarily a great indicator for what’s coming next. Since its IPO, Twitter’s struggled to grow and monetize.
Facebook opened at its estimated share price, met its estimated valuation, and has since enjoyed a relatively steady climb, ending 2016 with 1.2 billion daily active users, $26.7 billion in revenue, and $10.2 billion in net income. In many ways, Snap’s IPO is, on paper, much more Twitter than Facebook. We’d suspected that it might be, but now that the numbers are in, they look awfully similar.
This isn’t to say that Snap’s headed down the same path. Tech can be deeply unpredictable. A new feature set or piece of hardware could quickly upset the current balance, swinging the pendulum back in Snap’s direction. It could see new users and more astronomical growth in 2017. But without some degree of reinvention, it’s difficult to see where Snap might be able to claw it’s way from Twitter to Facebook status in the tech IPO world.
The implications of Snap’s IPO extend beyond the company itself, though. It extends to the social media landscape at large and to the influencers who depend on social media.
If Snap can raise a pretty staggering amount of money with a smashing success of an IPO despite not being profitable and less-than-encouraging growth numbers, it likely speaks to confidence in Snap’s ability to become more than it is now. And that’s the new world order in social media. Every platform is beginning to becoming everything. Twitter’s added livestreaming, Moments, better photo sharing, and more nuanced Direct Messaging abilities. Facebook’s also added livestreaming, along with robust photo sharing capabilities like 360-degree photos and videos. Instagram’s added Stories, Live, and Galleries, all within a relatively short period of time.
Snap, meanwhile, has a lot less going on, which will either be seen as a strength or as an opportunity to expand.
Influencers build followings, which means that they invest a lot of time in platforms. Which means that for the most part, they don’t take jumping from one platform to another lightly. But some influencers are jumping ship for Instagram because it provides a bigger audience, better chances for discovery, and more features and options for sharing. This could’ve been read as the death knell of Snapchat, but investors didn’t seem to think so.
Snap is going to do something new. That much is abundantly clear with its rebranding efforts and recent hires. And reports and rumors seem to suggest that it’s going to be big. Whether or not whatever Snap has up its ghostly sleeve is successful remains to be seen, but it will almost definitely have a substantial impact on its share prices, its users, and on the social media landscape as a whole.