Snap Inc., maker of the Snapchat app and face-mounted camera glasses called Spectacles, filed its S-1 with the SEC this past week, the first major step toward going public.
I thought it’d be interesting to compare Snap Inc. to Facebook, considering that Snap CEO Evan Spiegel’s IPO roadshow message is that his company is “The next Facebook,” according to coverage in the Wall Street Journal.
I spent some time digging through Snap’s S-1 filing and found some interesting tidbits:
- Snap aims to raise $3 billion in its IPO at a $25 billion valuation, up just slightly from the $20 billion valuation it reached in its $1.8 billion “extended” Series F round closed in May 2016 (and reported on here in the 4th edition of this newsletter)
- Snapchat currently boasts 158 million daily active users. (For reference: the company reported 110 million DAUs in December 2015.)
- These DAUs are currently creating 2.5 billion “Snaps” per day.
- 60% of these users use the chat service every day.
- DAUs check Snapchat more than 18 times per day.
- Snapchat users spend an average of 25-30 minutes each day.
I found some comparative figures from this article published in ZDNet in February 2012, on the day Facebook filed its S-1.
- Facebook had 483 million daily active users during the month of December 2011. (Roughly 3x Snapchat.)
- In that same month, Facebook users uploaded 250 million photos daily to FB. There were an average of 2.7 billion likes and comments made during the 3-month period ending December 31, 2011. (Roughly 1/10th of the photos uploaded but a comparable number of aggregate interactions to Snapchat at time of IPO filing.)
- Facebook users spent an aggregate of 9.7 billion minutes per day on the desktop site, which works out to about 12-13 minutes per day for each of FB’s then 845 million monthly active users. This also does not count time spent on the mobile app. (To compare: FB users spent slightly less time than Snapchat users on a per-day basis.)
Oh, and Facebook was also profitable and had comparatively more valuable assets and cash on hand at time of its IPO filing.
One of the metrics I find most interesting is to compare the per-user value of Snapchat compared to other platforms and services. I arrive at these figures by dividing the number of Daily Active Users by the then-current (or desired) valuation of the platform. (I’d prefer to use MAUs, but, tellingly, Snap Inc didn’t disclose MAU statistics in its S-1 filing.)
Per user values (DAU/valuation) are as follows:
- Snapchat: $25 billion valuation / 158 million DAU = ~$158 per DAU
- Facebook: $103 billion at IPO / 483 million DAU reported in S-1 = $213.25
- Twitter: $14.2 billion at $26 IPO price / 100 million DAU = $142
- Line: $7 billion IPO price on July 14, 2016 / 220 million DAU in 2016 = $31.81
- WhatsApp: $16 billion at time of acquisition by FB / 324 million DAU (72% of 450 MAU, via Sequoia Capital) = $49.38
- Instagram: $1 billion acquisition by Facebook in April 2012 / 1.38 million DAU in April 2012 (That’s via data from ComScore, but data from AppData suggested that Instagram had only 860,000 DAU at acquisition) = $724.63 per user at 1.38M DAU
It’s interesting to look at these figures, because it might hint at how Snap values and intends to position itself going forward. Whatever signal can be divined from Snap’s per-user-value figures points toward the company’s intention to aggregate attention and data in the same way as Facebook and Twitter did, rather than provide a simple service like Line and WhatsApp. In other words, the per-user value Snap Inc aims to show its investors is in the same ballpark as other massive social platforms of previous generations.
As a platform, Snapchat is compelling for a number of reasons, including its unique augmented reality components, an innovative user experience design paradigm and, importantly, a strangle hold on users’ attention by way of its ephemeral messaging and video play-back features. Whether Snap Inc is able to capitalize on its strengths and deliver on its potential value as a platform is still uncertain.
However, I remain skeptical that Snap Inc will be the next Facebook. I doubt Snap will attain Facebook’s scale or scope, and I’m not the first to point out that Snap’s current price feels a bit expensive.
We’ll see what happens.