MAR 8, 2017
(2 minute read)
Last Thursday March 2nd, Snap, Snapchat’s parent company, set the stock market abuzz with their IPO, closing at $24.48—44% higher than their offer price of $17. As humans we are wired to compare, and many analysts have compared Snap’s IPO with the likes of Facebook and Twitter. Are these fair comparisons? Let's review.
Facebook went public in May 2012 selling for $38.23 at market close, while Twitter went public in November 2013 selling for $44.94 at market close.
Clearly, Facebook was already a giant prior to its IPO, waiting eight years to go public after its founding. Snap only waited five years to release an IPO.
In revenue and profitability, Snap and Twitter are more alike, neither one seeing a profit prior to their IPO (or even after in Twitter's case).
In product development, however, Snap is closer to Facebook than Twitter. Snapchat CEO Evan Spiegel is hailed as a product visionary in Silicon Valley with such products as the Snapchat story, geo filters and lenses. Comparatively hashtags and retweets on Twitter were both user inventions. A further proof point is from back in 2013 when Facebook offered to buy Snapchat for $3 billion. When denied, Zuckerberg proceed to mimic every aspect of Snapchat that he could.
Snap reported that is had 158 million daily active users at the end of 2016 and an average of 2.5 billion “snaps” created every day. However, the company admitted a decreased rate in new users in the past couple quarters. Facebook on the other hand has grown to 1.86 billion people on it’s platform and 1.2 billion daily users.
How the company will proceed from here with the $3.4 billion that it hopes to raise with this IPO and whether it can ever turn a profit is yet to be seen. Will the disappearing ghost app fade away or haunt its competitors? Perhaps it will prove to be a category all on its own.