Category: Social Media

What You Need To Know About The “Snapchat” IPO

One of the most anticipated IPO’s is finally happening – SNAP will go public in an effort to raise up to $3 billion. The company is best known for its messaging app Snapchat, which is primarily an image sharing network. It’s hugely popular among younger people. Of the estimated 50 million Snapchat users, the median age is 18. In fact, teens seem to be opting for it over Facebook, whose average user’s age is closer to 40. The app was started by Stanford University classmates Evan Spiegel, Bobby Murphy, and Reggie Brown back in 2011. Its original purpose was to be a selfie app, which allowed users to share images that were only available for a very short amount of time. The purpose of having the images only be temporary was to encourage users to continuously create more content, thereby engaging with the app more often. However, they came up with the idea after Brown told Spiegel about a picture he wishes he hadn’t sent someone. Brown outright said he wished there was an app that would allow you to send “disappearing photos.” Spiegel decided it was a genius idea and immediately recruited Murphy to help them develop their new app. It was first called Picaboo, but two months after its debut, they relaunched it as Snapchat. It has since evolved into a combination of private messaging app and shared public content platform. The service completely confounded the potential investors the y originally approached. No one could fathom why the public would want to send disappearing photos. And it certainly was not an instant hit – before relaunching as Snapchat, the Picaboo app only had 127 users. It was about that time that the three founders had a falling out, which ended in Brown leaving the company and Spiegel and Murphy having to roll the app out under a new name due to a name conflict with a photo-book company. It took some high school kids to figure out how to make Snapchat an app that people actually wanted, though. In the fall of 2011, the company noticed that usage peaked between 9 a.m. and 3 p.m. among users at an Orange County, California high school. Spiegel’s mother had told her niece about the app, and she and her classmates quickly embraced it as a way to pass notes during class. The magic for them was that it left behind no evidence. By spring of 2012, it had spread to even more schools and users had surged to over 100,000. Shortly thereafter, a $425,000 investment from Lightspeed Venture Partners’ Jeremy Liew allowed Snapchat to expand their infrastructure, bringing the company’s valuation to around $4.25 million. Now, the company is estimated to privately be valued at $17.8 billion. Investors expect the public offering could lift that valuation to as high as $25 billion – that’s a 62x price-to-sales ratio. For comparison, Facebook’s ratio is just 13x. As of the end of 2016, Snap reported its service had 158 million active daily users, with an average of 2.5 billion “snaps” created on the app every day. Interestingly shares will be nonvoting stock, meaning investors won’t have any ability to influence the company’s direction. Regardless the young inventors of Snapchat are about to see their wealth skyrocket. From what I understand Spiegel and co-founder Robert Murphy each own 21.8% of the Class A stock, and the public offering will officially make Snap’s cofounders a couple of the world’s youngest billionaires. The company will trade under the ticker “SNAP” on the NYSE.

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Facebook Has A Birthday And Profits Double To $3.57 Billion!

Mark Zuckerberg and some of his fellow Harvard classmates launched “Thefacebook” in his dorm room on February 4, 2004. While the social-networking site, now simply called Facebook, is used by 2 out of every 7 people on the planet, it was originally only available at Harvard and other Ivy League schools that adopted the platform. It wasn’t until September 2006 that members of the general public was allowed to become a Facebook user, but it didn’t take long for the concept to catch fire – by the end of 2006, the number of users had more than doubled from 5.5 million to 12 million. Skip ahead to mid-2009, and Facebook surpasses MySpace as the number one social network in the U.S. It was about that time that they started making movies about the site and founder Mark Zuckerberg, who was just 25 when “The Social Network” was released. Facebook users continued to steadily climb and the company finally went public in early 2012. They had an initial IPO price of $38 which put the company’s value at $104 billion, the largest valuation to that date for a newly public company. At first, the shares struggled to maintain their IPO price, losing over a quarter of its starting value by the end of May. Of course things drastically turned around as the company continuously reported user growth and higher profitability over the successive quarters. Today, Facebook is valued at over $328 billion with a user base of 1.86 billion! Their latest earnings report released just this week showed total fourth-quarter revenues of $8.81 billion. What’s more, total profits doubled to $3.57 billion from $1.56 billion the year before. And Facebook is not done trying to generate further growth. The company is now focused on what CEO Mark Zuckerberg has called a “video-first” strategy, putting squarely in competition with Snapchat, a video-based social networking site with a fiercely loyal – and mostly younger – user base. Facebook continues to promote its live video and 360 video tools and is experimenting with more versatile camera filters. In August, Facebook-owned Instagram launched a near-identical feature to Snapchat’s “Stories”, which lets people post strings of videos and photos. They even kept the same name and are now experimenting with a Facebook version, also called “Stories.” Snapchat has already proved that the feature is extremely popular and Facebook hopes that it’s version can lure in more young users and keep their undeniably impressive growth streak going.

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Biggest Social Media Users Might Not Be Who You Think

Despite the popular belief that millennials are the generation most addicted to their phones, a recent report from Nielsen, the media information and analysis company, found that it is, in fact, Generation X that lavishes the most time on social media pages. Asked how many hours a week they spend on these networks, 35- to 49-year-olds averaged six hours and 58 minutes. Millennials, defined by the study as those aged 18 to 34, spent 39 fewer minutes per week. (People 50 and over, boomers and above, spent just four hours a week or so e-socializing.) The trend extended to overall media consumption by Generation X, whose members spend almost 32 hours a week, on average, on all media, compared to about 27 hours for millennials and closer to 20 hours for respondents 50 and older. It’s not as if technology is foreign to Gen X. But given these somewhat surprising numbers, should they really be telling their kids to get off their phones? (Source: Bloomberg)

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