Snap app must improve its user growth & ad value to maintain initial euphoria
Snap surged 44% in its stock market debut this week, valuing the disappearing-photo app maker at more than $28-billion
Snap surged 44% in its stock market debut this week, valuing the disappearing-photo app maker at more than $28-billion (R367-billion). That's a vote of confidence in the company's ability to grow quickly and fulfil its promise of new products to change how people communicate. Snap, which started with a mobile phone app for sending vanishing photo and video messages, has been building out its advertising and media business, reminding investors of the early days of Facebook and YouTube. Even so, some analysts are betting the rally won't last; two have already given the shares a "sell" rating, one with a price target of just $10. Why? Snap is years from profitability, with a net loss higher than its revenue. User growth on the Snapchat app slowed in the fourth quarter, fuelling scepticism about how big the company's advertising business can be.Investors still don't have a clear picture of how the company plans to become profitable, so instead must put their faith in CEO Evan Spiegel, w...
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