Snapchat’s Valuation

Nohely Rodriguez, Yingda Zhao, Farid Ijazi, Jeff Beck

 Timeline

Snapchat's Snapchat IPO

Valuation date
(1/23/2017) (3/2/2017)
 Snapchat?
● What is it?
○ Popular Messaging App
○ Originally a photo and video messaging app, evolved to include text messaging
○ Disappears forever
● Who founded Snapchat?
○ Stanford University Students
○ Picaboo
○ Evan Spiegel and Bobby Murphy
○ Reggie Brown
Demographics
 What does “going IPO” mean?
● IPO - Initial Public Offering
● A company wants to sell stock shares to the general public
● A company goes from a Private status (no general shareholders) to
Public (a firm with general shareholders)
 What is the procedure of an IPO?
● Privately owned company being publicly traded
● Business contacts an investment bank
● Determination of number and prices for shares to be issued to public
● Investment Bank sells shares on stock market for more than original
price.
 Pros and Cons of an IPO
Pros
● Strengthens capital base
● Makes acquisitions easier
● Diversifies ownership
● Increases prestige
Cons
● Puts pressure on short-term
growth
● Increases costs
● Imposes more restrictions on
management and on trading
● Makes former business owners
lose control of decision making
● Forces disclosure to the public
How does Snapchat’s valuation connect
with Professional Development?
● Honesty
○ Snapchat needs to be honest about their dealings
○ Cannot mislead customers or investors
○ Cannot “cook the books”
● Trustworthy
○ Supply relevant information
○ Cannot disclose confidential information
● Integrity
○ Cannot be persuaded to do whats wrong
 What is Snapchat doing right now?
● Current forms of generating revenue
● Advertisements
○ Filters for companies corresponding to user's location
○ “Commercials” placed throughout user’s stories
● “Discover”
○ Media outlets generate articles in the form of “stories”
○ Example: CNN, ESPN, People Magazine etc.
● Customizable filters for small fee to users
○ Approx. $5 for an 8 hour time span
○ Varies by area covered and duration
 Snapchat's Future Plans
● Focus on users
○ More access to wider range of audience
● Spectacles
○ “Sunglasses that Snap!”
● In-app purchases
○ Still in the works...
 Was Snapchat’s valuation justifiable?
● Young company
○ A Lot of risk for investors
○ Uncertainty for its future
○ Unanswered questions
Questions?
 Bibliography
● Barinka, Alex, and Sarah Frier. "Snapchat Is Justifying Its $20 Billion Valuation by
Emphasizing User Engagement." Bloomberg.com. Bloomberg, 20 Jan. 2017. Web. 8
Apr. 2017.
● Betters, Elyse. "Whats the Point of Snapchat and How Does It Work?" Pocket-lint. N.p.,
20 Jan. 2017. Web. 8 Apr. 2017.
● Koba, Mark. "Initial Public Offering: CNBC Explains." CNBC. CNBC, 27 Dec. 2013. Web.
10 Apr. 2017.
● Marvin, Rob. "Snapchat Spectacles: Everything You Need to Know." PCMAG.
PCMAG.COM, 21 Feb. 2017. Web. 8 Apr. 2017.
● Newton, Casey. "Snapchat Unveils $130 Connected Sunglasses and Rebrands as Snap,
Inc." The Verge. The Verge, 23 Sept. 2016. Web. 11 Apr. 2017.
● Newberry, Christina. "Top Snapchat Demographics That Matter to Social Media
Marketers." Hootsuite Social Media Management. N.p., 23 Aug. 2016. Web. 11 Apr.
2017.
● Staff, Investopedia. "What Does 'going Public' Mean?" Investopedia. N.p., 09 Mar. 2005.
Web. 8 Apr. 2017.
● Valinsky, April 22 2016by Jordan, April 7 2017by Aaron Gottlieb, April 7 2017by Jessica
Davies, April 7 2017by Lucinda Southern, Sponsored By Parse.ly, April 7 2017by Sahil
Patel, and April 7 2017by Jessica Schiffer. "Snapchat Quietly Kills In-app Purchase
Option." Digiday. N.p., 22 Apr. 2016. Web. 11 Apr. 2017.