Few say no to $3 billion USD, especially when its being offered to you by Mark Zuckerbeg. Unless you’re Evan Spiegel, CEO of Snapchat. Nine months ago, Spiegel was worth over $3 billion dollars USD after Snap Inc.’s March IPO. Although opening day saw Snap shares at $24 USD, the market closed this past Friday with shares at an all time low under $13 giving the media company a market cap of $15.6 billion down roughly 50% from its initial valuation of $31 billion USD. After reporting revenue of $208 million missing analysts’ expectations of $237 million by $30 million for the third quarter, the company has plans to strengthen their flagship product Snapchat.
Snapchat has seen glacial user growth (less than 3% quarter over quarter). In an effort to acquire new users, Snapchat plans to roll out the following course-correcting initaitives:
1) Accelerate adoption of product among Android users.
2) Embrace social media influencers as opposed to shunning them.
3) Consider users in the “rest-of-the-world” outside of first-world countries with easily accessible high-bandwidth video.
4) Work harder to attract demographic above 34 yeras old.
From a B2B perspective, Snap will try to win more business with the following new ad formats:
1) Promoted stories – Strings together many Snaps into a longer-form slideshow that can be opened from a tile on the Stories page.
2) Augmented Reality Trial ads – Allow people to play with AR versions of a product appearing on the scene surrounding them.
Will these initiatives work? In a transaction dated Thursday, November 9th two days after the ominous earnings report call, Spiegel sold $20.5 million worth of shares. His remaing shares are worth a little over $1 billion. Even if Spiegel plans to jump ship, the Snapchat founders had pledged to donate over 13 million shares of stock to arts, education and youth non-profit sectors. Hopefully they’ll follow through.
Not bad for being 27 years old.