Snapchat followed in the footsteps of Facebook and Twitter earlier this month by going public.
The company was worth a staggering $28.4 billion when it closed after its first day’s trading – a figure based, I think, mostly on hype.
I should be clear – I’m not an expert on trading stocks and shares, so this blog focuses more on Snap’s potential for financial success as a social network.
But at $23billion – it will have to go stratospheric to be worth it. And it’s my contention that it won’t.
So here are five reasons I think the market got a bit carried away…
1. Instagram, bitch
It’s no coincidence that Instagram Stories popped up around the time it became clear Snapchat would be going public.
Insta’s function is almost unrecognisable from Snapchat stories to look at – as they both allow users to document their day with ephemeral clips of video and text.
2. And now everyone is at it
As if the Snapchat knock-off over on Instagram wasn’t enough, Facebook also recently announced it is to introduce another incredibly similar function on Messenger. This time it’s called Messenger Day.
And, according to this piece on Techradar, it’s already doing feature upgrades faster and better than Snap.
Aww snap, Snap.
While Snap does now have an API that can be used by brands and agencies to deliver ads, it’s going to struggle to be anywhere near as ubiquitously understood as the Facebook/Instagram model on Facebook Ads Manager.
Another problem is that users simply don’t share as much information with Snapchat, which means it has less information to target with.
And there is absolutely nothing to stop Facebook ripping off any new features it comes up with – and has already done so once with Snap’s A/B testing feature.
4. It’s already falling
Hey, don’t just take my word for it. The market is already losing faith after the turbo-charged IPO…
5. It’s user base ain’t loyal (and also has no money)
Teens make up over half of Snapchat’s users, which is great in many respects. They are often the market advertisers dream of courting. But they are also notoriously fickle.
Snapchat will now have huge pressure to keep itself new and exciting, in order to make sure those youngsters don’t just switch to the Next Big Thing.
This young base also works as a limiting factor in many situations. Often social buyers will shy away from Snap because it is only young people on there. If you hope for anyone over the age of 25 to buy your product, you’ll simply switch to Instagram.
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