by Catlin Huston in Market Watch on Feb 7, 2017
Snap Inc., looking to distance itself from the pack, claims they are different…not just another social platform
The initial-public-offering filing by Snap Inc. on March 3 has generated a lot of attention, as one of the largest technology IPOs in years. Because of its social messaging app, Snapchat, and large valuation, the company SNAP, +0.67% has drawn comparisons to the IPOs of Facebook and Twitter. And during its road show, Snap reportedly said it was the next Facebook, not Twitter, according to the Wall Street Journal, but after it revealed large net losses, investors and analysts are not so sure.
“It is concerning, because people got burned with Twitter,” said Santosh Rao, head of research at Manhattan Venture Partners.
Since going the first day of trading, May 18, 2012, shares of Facebook Inc.FB, +0.01% have more than tripled, gaining 243%. Shares of Twitter Inc.TWTR, -1.21% have fallen 61% since the company’s first day of trading on Nov. 7, 2013.
At the time it went public, Facebook was about 8 years old. Twitter was 7 years old on its IPO date. Snap is 5.
For what it’s worth, Snap in its prospectus appears to be trying to avoid comparisons by declaring that it is a camera company and not another social-media network. That may be merited. The company is centered on image-based communication, said Chi-Hua Chien, founder of Goodwater Capital, but that still invites comparisons to Facebook’s Instagram.
Given the different metrics preferred by each company, different earnings schedules and the difference in their ages, it’s hard to make an apples-to-apples comparison. We used the latest data available for each company, as well as numbers from Twitter and Facebook just before they went public, to show a rough comparison.
Here’s how they stack up:
Daily active users
• For the three months ended Dec. 31, 2016, Snap reported 158 million daily active users, a 3% increase from the previous quarter, whose comparable DAU figure was 153 million. Investors are concerned that user growth could be slowing as the company had a 7% increase from the second to third quarter.
• For its fourth quarter, ended in December 2016, Facebook reported 1.23 billion DAUs, up from 1.18 billion in the previous quarter, marking an increase of 4.2%. In the last quarter before it went public, ended March 31, 2012, Facebook had 526 million DAUs, up from 483 million in the previous quarter, an 8.9% increase.
• Twitter does not break out DAU numbers, but a Bloomberg report calculated 136 million daily active users as of June 2016. In the third quarter, which ended in September, the most recent quarter for which Twitter has reported earnings, the company said DAUs were up 7% on a year-over-year basis, compared with an increase of 5% in the second quarter.
• Facebook reported net income of $4.57 billion in the fourth quarter, up from $3.12 billion in the third quarter. In the quarter before it went public, Facebook was profitable and recorded net income of $205 million, down from $302 million in the previous quarter.
• Snap reported a net loss of $169.9 million in the fourth quarter, wider than its loss of $124.2 million in the previous quarter.
• Twitter reported a net loss of $103 million in the third quarter, narrower than its loss of $107 million in the second quarter. Twitter was operating at a loss before going public, recording a net loss of $64.6 million in the quarter ended Sept. 30, 2013, wider than its loss of $42.2 million in the prior quarter.
• Facebook is king in terms of social-media revenue, with $8.8 billion in the fourth quarter of 2016, up from $7.01 billion in the third quarter. Facebook reported worldwide average revenue per user of $4.83 for the fourth quarter of 2016. In the quarter before it went public, Facebook recorded total revenue of $1.06 billion and revenue per user of $1.21.
• Snap recorded revenue of $165.7 million in the fourth quarter of 2016, up from $128.2 million a year before. It reported revenue per user of $1.05 for the fourth quarter of 2016.
• Twitter reported third-quarter revenue of $616 million in 2016, up from $602 million in the previous quarter. It does not break out average revenue per user. In the last quarter before it went public, ended Sept. 30, 2013, Twitter recorded revenue of $168.6 million.
Caitlin Huston is a MarketWatch reporter based in New York. She covers startups and small business. You can follow her on Twitter @hustonca.