Snapchat stock on the slide but is there good news on the way?
When you invest in an internet company you pretty much know what you are getting. Facebook, Twitter, Google, open their doors and provide a home for the masses where the users consume adverts, build site revenue and drive the bottom line forward. But Snapchat is a just a little bit different from the norm. Snapchat shuns the desktop world of the internet with its website really being nothing more than an information capture page. Instead, focusing on the growing mobile app market. When you consider this it is no wonder that Facebook is losing members to Snapchat.
Snap Inc. went public in early March with shares at $17 (U.S.). At the time Morgan Stanley estimated that Snapchat shares could reach as high as $28 within a year. But, Morgan Stanley has now cut its stock target for Snapchat stock to just half of the March target price.
But none of this is can be really surprising as Snapchat is particularly tough to evaluate because it is only two years old its advertising business has no track record. And there is no doubt that Snap it has a different strategy from other Internet companies.
Mark Zuckerberg’s mission for Facebook was to connect the world. Snapchats mission is to connect the world purely via mobile and some big companies are now buying into this vision. CNN recently announced that it was launching a daily news show on Snapchat. Snap has a number of deals with established entertainment players, including partnerships with TV networks NBC and ABC, the BBC, Vice Media, and a $100-million agreement announced in June with Time Warner, which has committed to producing up to 10 new Snapchat Shows. And it has also been reported by Variety that Snapchat is to move into scripted content by the year’s end.
Snapchats head of content Nick Bell speaking at the Edinburgh International Television Festival said:
“Mobile is the most complementary thing to TV that has been around,” Bell said, adding that Snapchat was not a “TV killer.” “We’re really capturing the audience who are not probably consuming TV at the same rate and pace of engagement that they once were.”
It would seem that Snapchat is starting to pay more attention to their social influencers and increasing the number of verified members (power users) they have. The Power Users are now increasingly key in the continued growth of Snapchat. The shift in strategy is to match Facebook-owned Instagram, which has worked closely with celebrities and users with large followings for years.
What do you think of the direction Snapchat is moving in and what do you think its future is?
Let me know in the comments below.