iPhone X: Overvalued or worth the Price?

Is Snap Inc. Doomed to Fail?

     Snap Inc. is the parent company to the social media platform many of us use every day, Snapchat. Yes on the surface Snapchat is very popular amongst our generation of young adults (ages ranging from 14 to 25), but this is also one of the biggest problems Snap Inc. has been trying to deal with. Since their existence, they have had to compete with the Tech Kings of the world, Facebook. And unfortunately for Snapchat, Facebook has already acquired many other social platforms such as Instagram, Whats App, and many other start ups. In fact, Facebook's CEO and founder Mark Zuckerberg offered Evan Spiegel (Snap Inc. CEO) $3 billion for his popular social platform back in 2013 in an attempt to gain back the declining engagement of it's teenage users. But since that decision to decline the deal by Evan Spiegel, both companies have substantially expanded their values; but one more so than the other.

     Today, Snap Inc. is value at around $14 billion and Facebook is valued at over $490 billion. When Facebook purchased Instagram in 2012, they were valued at around $58 billion. We already know what Facebook valued Snap at in 2013, so we can see that both companies have significantly grown in the past couple years. However, Snapchat is now beginning to struggle to retain its users due to Facebook and Instagram's dip into their market share. Snapchat has been known for their "Stories" feature, along with it's photo sharing applications for it's users. And Facebook has acknowledged that its younger users were more infatuated with Snapchat's networking abilities. Starting to lose younger active users, Mark Zuckerberg launched a full on attack on Snapchat. Instagram and Whats App both launched programs to rival Snapchat's "stories" or "geofilters". Instagram especially has dipped into Snapchats market share and become a key growth driver for his multi-billion dollar corporation. Since Instagram released it's own version of Snapchats "stories", its been downhill for Snap Inc. Instagram's growth has shot up this year, and has successfully begun to take market growth and youthful users from Snapchat.

     Snap Inc. seems to be having difficulty in many aspects of it's business. Directly competing with Facebook and it's assets definitely makes things more difficult as well. But other than user growth slowing and teenagers being drawn to Instagram and Whats App, Snapchat still has yet to even make a profit. Year after year, Snap Inc. is running deficits, and in 2016 the company posted a net loss of nearly $515 million. Even with annual revenues upwards of more than $400 million, the company is burning through cash in it's product research and development, yet not bringing in enough revenues through its advertising efforts. Snapchat advertising doesn't have the reach that Facebook and Instagram do. In fact, Facebook has developed technology that can better connect certain ads to people that may be more interested and connected to those products or services. In effect, companies are more reluctant to pay more for those ad spaces, bringing in more revenue for Facebook. Snapchat however, offers ad space in the for of SnapAds, Geofilters, Sponsored Lens Filters, etc. But these ads don't target specific audiences as effectively as Facebook's ads might. Facebook also has a much bigger audience as of today. Although this chart focus's on Twitter, you can still see the active user growth differentials in Facebook and it's assets versus Snapchat.

With this being said, Snapchat has proven itself to be in trouble. Facebook is trying to acquire all the market share it can regarding millenials and young adults ranged from 22 up to 30 years of age. If Snapchat can't figure out a way to retain it's users and gain new, make more effective ad space and strategies, and start making profits, the company will surely not be able to last long amongst it's fierce competitors.