Am I the only one here who is impressed with Evan Spiegel + optimistic for Snapchat?
Everyone keeps citing the fact that the company is pre-revenue and pre-profits, but FB was too for a while. Snapchat can easily turn on the revenue and profit hose if they so choose to.
1.5 ads a day x $20 CPM x 100m DAU x 365 days/year = 1.095B in revenue a year from advertising alone! With Snapchat's explosive growth, we can assume it will eventually hit 200m DAU. That means 2.2b in annual revenue, just from advertising! Add in monetizing things like the discover feature, Snapchat, to even things like local event promotion, and that company can hit in 2.5b
The kicker here is that Snapchat can be instantly profitable. 1000 employees will cost at max 100M, and infrastructure costs will only cost a few hundred million. On 2B in revenue, that's insanely profitable.
The big question mark is if ads reduce user growth and engagement metrics. However, it seems like Snapchat is a platform uniquely similar to TV, hence I personally don't care when I see a high quality ad or two. Moreover, they are putting a lot of attention to this issue, which is awesome.
Just for a comparison, Twitter made 1.4b in annual revenue and has never posted a profit, and is worth 24 billion. If Snapchat makes 2.2b in annual revenue, and got the same P/S ratio, it would be worth 36bn. Not bad to get in at a 15bn valuation if you ask me.
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Am I the only one here who is impressed with Evan Spiegel + optimistic for Snapchat?
Everyone keeps citing the fact that the company is pre-revenue and pre-profits, but FB was too for a while. Snapchat can easily turn on the revenue and profit hose if they so choose to.
1.5 ads a day x $20 CPM x 100m DAU x 365 days/year = 1.095B in revenue a year from advertising alone! With Snapchat's explosive growth, we can assume it will eventually hit 200m DAU. That means 2.2b in annual revenue, just from advertising! Add in monetizing things like the discover feature, Snapchat, to even things like local event promotion, and that company can hit in 2.5b
The kicker here is that Snapchat can be instantly profitable. 1000 employees will cost at max 100M, and infrastructure costs will only cost a few hundred million. On 2B in revenue, that's insanely profitable.
The big question mark is if ads reduce user growth and engagement metrics. However, it seems like Snapchat is a platform uniquely similar to TV, hence I personally don't care when I see a high quality ad or two. Moreover, they are putting a lot of attention to this issue, which is awesome.
Just for a comparison, Twitter made 1.4b in annual revenue and has never posted a profit, and is worth 24 billion. If Snapchat makes 2.2b in annual revenue, and got the same P/S ratio, it would be worth 36bn. Not bad to get in at a 15bn valuation if you ask me.