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In One Chart - February 28, 2019

In One Chart: If you put $10k into Snap Inc’s IPO

… you would now have $4,890 (a 51.1% loss, as of publishing). If instead you had bought a Chipotle steak burrito every day since the IPO, you’d still have $5,475 left over (plus 730 delicious burritos).

On March 2, 2017, two years ago this Saturday, Snap Inc (SNAP) listed its initial public offering (IPO) on the New York Stock Exchange at $17 per share — a mark it hasn’t hit since March of 2018.

Snap Inc. is the maker of the mobile-first social media application Snapchat, which allows users to create and share photos, videos, and messages that disappear once viewed by users.

The company’s biggest struggle as of late: the users are disappearing. Snapchat’s daily active users (DAU) peaked at 191 million in 2018 Q1, fell to 186 million in Q3 of that year, and remained unchanged in Q4.

Snap’s time as a publicly traded company has been tumultuous, to say the least. From a Kylie Jenner roasting that shaved $1.3B in market cap, to the dozen-plus senior executive departures, to encroachment from competitors like Twitter (TWTR) and Facebook-owned Instagram (FB) — it’s been a complicated two years.

The chart below shows how a $10,000 investment in each of Snap, Twitter, and Facebook has fared since Snap’s March 2017 IPO. While the last two years haven’t been a smooth ride for any of the social media titans, Snap is lagging far behind.

Click to view in YCharts

Acknowledging the two years of poor performance, Snap Inc’s recent earnings report could be a turning point for the company.

Snap’s fourth quarter financials surprised Wall Street with a loss of $0.04 per share (adjusted) and revenues of $390 million, beating analysts’ expectations of $0.07 per share loss and $376 million in revenue. Optimists point to this beat and leveling (bottoming out?) DAU as evidence the company can continue to expand revenues, improve profitability, and return to DAU growth in future quarters.

Founder and CEO Evan Spiegel said on a recent earnings call, “We are now able to reach 70% of the total 13 to 34-year‐old U.S. population with premium mobile video ads on a monthly basis.” That’s surely a step toward monetization. Maybe they like Chipotle burritos!

To the contrary, a major inhibitor to user growth, and in turn, monetization, has been a stalled rollout of updates to the Snapchat’s Android version. Spiegel has talked about a major Android update for years, yet he and the company have continually prioritized the iOS version of Snapchat available only on Apple products.

Getting users to embrace an app and use it regularly is the biggest challenge for any mobile application maker. Snapchat’s DAU growth will be pivotal to Snap Inc’s stock performance… and our burrito consumption.

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