Snap touts devoted users to justify $20b value
Social media company goes against the grain in its plan to focus on more technologically mature markets
Snap Inc is hoping to convince public market investors it’s worth upwards of $20 billion (Dh73.46 billion) by stressing how important its app is to users’ daily lives.
That’s what Snap’s management highlighted this month to analysts from banks underwriting its initial public offering, according to people familiar with the matter.
The company laid out a slew of engagement metrics that will be used to build financial models to determine the valuation it will seek, they said, asking not to be identified as the details aren’t public.
The company gave out numbers on daily active users, which currently sit at just more than 150 million. Management talked about the number of snaps — annotated photos and short videos — its users take daily, and how long they spend on the app.
They detailed what percentage of users take photos using the app’s camera, as well as how many of those images use geofilters be critically important. As management told the analysts, Snap is still an early stage business where short-term performance may be “lumpy” as it grows.
Engagement matters because Snap intends to focus on more technologically mature markets where it will look for ways to increase its average revenue per user, the people said. That’s a departure from social-media rivals.
Valuation yardstick
At Twitter monthly activeuser growth has been a key metric and daily active users aren’t disclosed. At Facebook, the company’s goal is to connect everyone in the world on the site, using a strategy that puts a lot of emphasis on emerging markets. A representative for Snap declined to comment.
Selecting these metrics is a key part of the IPO process, as Wall Street investors seek clarity on how to value the business from Day 1. They’re the yardstick that analysts and investors will use to gauge the company’s success.