Snap Inc.
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Snapchat's owner floated on the stock market in March 2017 at $17 a share; it now trades at about $14.61. Young people love the app, but Instagram copied its Stories feature in 2016, and Instagram Stories now has more daily users than the whole of Snapchat. Snap's user growth has slowed to about 3% a quarter, and it loses a lot of money. Its answer is a big redesign of the app, rolling out now. Is this a fallen star about to bounce back, or is the worst still to come?
Snap makes Snapchat, a camera and messaging app where photos and videos disappear after they are viewed. The app is free; almost all of Snap's money comes from adverts shown between Stories and in its Discover section. It also sells Spectacles, sunglasses with a built-in camera.
CEO Evan Spiegel — Co-founded Snapchat at Stanford in 2011; still runs the company and controls the voting shares. · 3,000 employees · Venice, Los Angeles, California, USA · 1,220M shares out
- 2017-11-07 · Q3 results
Revenue $207.9M, up 62% on a year ago, well below what analysts expected; growth has slowed every quarter this year. Daily users 178 million, up only 3% on the previous quarter. Net loss $443M for the quarter. Most of the $3.1B loss so far this year is a one-off $2.5B charge for staff share awards triggered by the stock market listing; without it, Snap still lost about $640M. $2.3B of cash and no debt.
- 2017-11-07Snap shares slump after results miss; Spiegel promises a redesign
Snap's shares fell sharply after weak results. Evan Spiegel admitted the app is hard for new users to understand and said Snap will redesign it.
- 2017-11-29Snapchat unveils its redesign
The new Snapchat separates messages from friends from videos by media companies and celebrities. It is rolling out to a small group of users first. Some early users have complained.
- ▪Instagram, owned by Facebook, is copying Snapchat's features and already has more users.
- ▪User growth is slowing, and a big redesign could put off the loyal users Snap already has.
- ▪Heavy losses: about $620M of cash used in nine months, although it has $2.3B in the bank and no debt.
- ▪Advertisers prefer Google and Facebook, and Snap's advert prices are falling.
End of 2017: the US economy is growing steadily and the stock market has had a strong year. The Federal Reserve has just raised interest rates for the third time this year, but borrowing is still cheap by historical standards.
- S&P 500 level: ~2674 — up about 19% in 2017
- Nasdaq Composite: ~6903 — tech shares had a strong year
- Fed funds rate: 1.25%–1.50% — raised in December 2017
- Unemployment: ~4.1% — lowest in about 17 years
Online advertising is growing fast, but Google and Facebook take most of it. Facebook owns Instagram, which copied Snapchat's Stories format in August 2016 and passed 250 million daily Stories users by mid-2017.
See the full numbers
USD millions (except per-share); Jan–Sep of each year
Hover a line item for a definition ⓘ
| Income statement | Jan–Sep 2016 | Jan–Sep 2017 |
|---|---|---|
| Revenue | 238.8 | 539.3 |
| Gross profit | -59.5 | 13 |
| Operating income | -350.6 | -3,125 |
| Net income | -344.7 | -3,095 |
| EPS | -0.43 | -2.71 |
| Balance sheet | Sep 2017 |
|---|---|
| Cash & equivalents | 2,298 |
| Total debt | 0 |
| Total assets | 3,542 |
| Shareholders' equity | 3,175 |
| Cash flow | Jan–Sep 2016 | Jan–Sep 2017 |
|---|---|---|
| Operating cash flow | -443.5 | -558.6 |
| Capex | -46.1 | -63.3 |
| Free cash flow | -489.6 | -621.9 |
Everything here is dated on or before 2017-12-29. Make your call — you won't see what happened next until you commit.
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