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| April 29, 2017

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Snapchat IPO Explained!

Snapchat

What is Snapchat?

Snapchat

Snapchat is a messaging app with a particular focus on the sharing of images and videos. While company’s across all industries have struggled to understand the ever mystifying millennial segment, Snapchat has successfully managed to resonate with this segment around the world. Even though the early adopters of the platform were mostly from the younger age bracket, Snapchat’s popularity has now spilled over to the relatively older users as well. According to Snapchat their users are mostly from the 18 to 24 age bracket.

Snapchat

Snapchat have since pivoted from being just a messaging platform to being a “camera company” looking to reinvent the industry. They’ve also ventured into partnering with content companies like Buzzfeed, CNN, Comedy Central etc. to provide Snapchat users with interactive, mobile friendly content. They also have launched a sunglass cum camera that allows you to take pictures and upload directly to Snapchat.

Snapchat’s phenomenal growth

Snapchat launched in 2011 as Picaboo (later renamed to Snapchat the same year) and in 2 years time it already reached more than a million daily active users (DAU). By 2014, after having added a few critical features like video, filters and stories, Snapchat reached around 50Mn DAU. Snapchat has continued to upgrade the app adding more and more features reaching 100Mn DAU in 2015 and 150MN DAU in 2016.

In 2013, Facebook, the largest social media platform offered to buy out Snapchat at a valuation of USD 3 Billion but failed. Since then facebook has used its apps like Messenger, Instagram and recently WhatsApp to copy Snapchat’s features such as lenses/filters and stories in an attempt to equalize Snapchat’s lead on Facebook. Snapchat has launched its IPO on March 03 2017 at a valuation of USD 24 Billion. That is 8x more than what facebook had offered 3 years back.

What’s next?

Snapchat’s co-founder and CEO, Steven Speigel wants to continue to develop the platform and acquire more DAU. This means more fun features to look forward to for the users, and more source of value(ation) for the investors buying up Snapchat’s share. In addition to focusing on building the platform, Snapchat is looking to bring to market innovative camera hardware (like the spectacles). Rumor has it that Snapchat is currently working on a drone. Without a doubt interesting times lay ahead for Snapchat.

About Nishadul Haque

Nihal is an ardent technophile with interests in photography, graphics designing and digital media. A finance major from IBA, DU he's currently working in Robi Digital Services as Strategy Specialist.

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