Snapchat had it's IPO this week and they initially set their stock price at $17, which after the first day of trading had jumped all the way up to around $24 dollars a share, which gives them a valuation of about $33 billion. That's around $13 billion more than what private parties had been offering to purchase them at in the past few months. SNAP was certainly the hot stock of the day on Thursday, controlling about 10% of the total volume of trades for the day.
I'm certainly bullish on SNAP, and I'm not stock analyst, but this strikes me as suspiciously high for their opening valuation. To put this in perspective, Twitter has a valuation of only $11 billion, while Facebook, which owns subsidiaries such as Instagram and WhatsApp and pulled in a profit of $1 billion in the previous quarter, is valued way up at almost $400 billion. Meanwhile SNAP actually revealed they were $1.2 billion in the red for fiscal 2016.
The short answer everyone gives is that people under 30 are spending all their time in the Snapchat app, and that they "own" this demographic. As I shared in my pod with Cillian, I'm not convinced that anyone can "own" a demographic, I feel they more likely can own a use case. Still, I was curious how true it was that Snap was where people under 30 lived.
Well, Goldwater Capital came out with a graph showing how much time people under 30 were spending in various apps. Turns out, people under 30 are spending over twice as much time directly on Facebook alone as they are on Snap, which also falls just short of how long they're spending on Youtube. Snap is equal for screen time with Instagram, and about double that of Twitter. Judging by what you hear, these results are rather stunning, as people have been reporting that young users have been fleeing Facebook for the better part of 5 years now.
It's going to be very interesting to see how Snapchat can respond to this valuation and if the company is going to be able to show any form of ROI for all these investors.
As an aside, I really wish Goldwater had been able to get data on iMessage, I'd be very curious to see how it fares in comparison to these other apps.