Opinion: Snapchat, originally named Picaboo, is a social media app that allows users to take and manipulate photos and videos for sharing with friends. These messages disappear seconds after opening them. According to Pocket-Lint, “you can add your snap to your ‘story’, a 24-hour collection of all your snaps that’s broadcasted to the world or just your followers.” The Pocket-Lint article also offers Snapchat vocabulary words for individuals who are technology challenged. Some of the fun and often silly special effects that Snapchat offers are face-swapping, dog faces, and the bulging eyes and rainbow vomit. Snapchat’s target populace is among millennials and younger generations. However, I have met several individuals from wiser generations who love to use the app. Isn’t that right mom?
Snapchat revolutionized the advertising processes and as the company grew they discovered that these networks become more valuable when used at a personal level. This has lead to Snapchat’s increasing popularity. The New York Times states “they made Snapchat as an app that would send disappearing messages and photos in a way that more closely mimicked the dynamics of a real-world conversation. That would increase the appeal of Snapchat as a service.” As Snapchat’s popularity grew so did its list of investors and with more investors, the creators, Evan Spiegel and Bobby Murphy, were able to improve their app. Snap Inc. earns revenue by selling advertisements like its competitors Facebook and Twitter. Bloomberg writes that Snap Inc.’s “annual revenue is small—perhaps $200 million, according to several press reports—but it has already drawn many big-name advertisers.” Unlike its competitors, Snapchat differs in one important aspect and that is everything is contained within one app. This is appealing to advertisers because it allows Snapchat to be creative with how they use the advertisements within their app. The BusinessInsider posits, “where else can you buy a Sponsored Geofilter that lets users add branded location-based stickers to their photos, or a Sponsored Lens that lets people turn their faces into a Taco Bell taco?”
Snap Inc.’s growth signifies a change not only for the company but for the Los Angeles business industry, where wealth managers, lawyers, and real estate agents are gearing up for another new influx of millionaires as Snap Inc. goes public. As Snap Inc. grew it acquired several locations in Los Angeles and the local economy has already benefited from the growth.
Many businesses choose to go for an IPO, an Initial Public Offering, in order to expand and gain more capital. The businesses at this point are no longer private and people can purchase stock in the company. This means that individuals own a small share of the company. According to CNBC, going public allows the company “to raise funds and have more liquidity or cash on hand by selling shares publicly…. Another plus from going public benefit is that stocks can be used in merger and acquisition deals as part of the payment.” All of these benefits are dependent on whether or not the company is successful in the stock market.
There are both positives and negatives associated with going public. The Telegraph UK warns Snap Inc. that investors are unsure whether or not it will be profitable, and investors are wary to invest in tech companies because of “Facebook’s disastrous stock market floatation five years ago.” However, Facebook’s disaster floatation was not a result of the company’s failure to ensure a successful run on the stock market. The trouble was a result of technical glitches. The Guardian reports that “Facebook spokespeople united with Morgan Stanley in suggesting that technical glitches on the Nasdaq system, which delayed the start of trading by 45 minutes and saw investors struggle to get confirmation of trades, had damaged confidence.” A glitch that major, would, of course, make investors wary, but it is not the fault of the company. The Telegraph article mentioned above warns Snap Inc. that investors are wary because of Facebook’s entrance into the stock market. That warning is unnecessary as Facebook was unable to protect itself from Nasdaq’s failure to start on time.
Snap Inc.’s first day of trading was impressive as the Wall Street Journal reports, “Snap closed at $24.48, up $7.48 or 44% from its offer price of $17. Its first-day pop was bigger than Alibaba's, Facebook's and Google's, but smaller than LinkedIn's, Twitter's and Yelp's.” Tech stocks are still fairly new on the stock market exchange scene and it’s going to take a few tries before tech shares become fully adjusted to the system. Snap Inc.’s initial success shows promising results for future tech companies, but it has only been one day.
I’d say follow me on Snapchat, but I’m one of the few millennials that don’t have one. So instead head over to Twitter and follow me there.
Follow this author on Twitter: @jrichardson1776