In filing for $3 billion IPO, Snapchat identifies Apple as a major competitor
Snap Inc, the company behind the Snapchat iOS app, is preparing an initial public offering which it hopes can raise $3 billion, with the Securities and Exchange Commission filing identifying Apple and its iMessage platform as one of its main competitors.
Announced on Thursday, the SEC filing reveals the "camera company" wants to use the trading symbol "SNAP" on the New York Stock Exchange. Snapchat has approximately 158 million daily users, according to the filing, with over 2.5 billion "Snaps" created every day by its users, with the average user opening the app 18 times a day and using it for between 25 and 30 minutes per day.
By the end of last year, Snap had a reported revenue of $404.5 million, a 689-percent year-on-year increase, but the net loss for the period of $514.6 million is also greater than the loss the previous year of $372.9 million. Even so, the high $3 billion target for the IPO is said by Theh Wall Street Journal to give Snap a valuation of at least $20 billion, and possibly as high as $25 billion.
The company has been accused of inflating its user numbers to boost its IPO, as part of a lawsuit filed by Anthony Pompliano in January that alleges wrongful termination. The complaint has since been denied by Snap, with a spokesperson describing it as being "totally made up by a disgruntled former employee."
In the filing, Apple is mentioned by name a total of six times, with five referring to ways Apple is a risk to the company. It is noted Apple and Google have extensive control over the iOS and Android operating systems and the major app stores, meaning each can "provide customers with products that compete with" Snapchat, including potentially giving preferential treatment to competitors that "could seriously harm Snapchat usage on mobile devices."
There is an acknowledgement Snapchat is "heavily influenced" by the technology offered by operating systems like iOS, and could suffer from extreme changes to the way it operates. "We may be able to create new products based on advances in their capabilities, but we may also be limited if they choose to block a particular feature or reject new updates in our application."
Snap admits the majority of its user engagement is through iPhones, and has prioritized development of its products on iOS over Android. To continue its user engagement growth, Snap suggests a shift in priorities to put Android development first, with added concern of harm to the business if "fewer people use smartphones with iOS" and if the company doesn't improve its Android products sufficiently.
In terms of "significant competition," Apple is on the list of "larger, more established companies," alongside Facebook's Instagram and WhatsApp, Google, Twitter, Line, Naver, Tencent, and Kakao. Apple, Facebook, and Google are singled out again, with Snap warning the three "could use strong or dominant positions in one or more markets to gain competitive advantages against us in areas where we operate."
Instagram is highlighted as an example of the intense competition, with the filing noting the Facebook subsidiary's introduction of a feature "that largely mimics our Stories" included in Snapchat itself.
The sixth and final mention of Apple in the filing appears in the list of Executive Officers. Steven Horowitz, Vice President of Engineering since January 2015, has previously worked for Google, Microsoft, and Apple, and is also a member of the board of directors at Quotient Technology.
Announced on Thursday, the SEC filing reveals the "camera company" wants to use the trading symbol "SNAP" on the New York Stock Exchange. Snapchat has approximately 158 million daily users, according to the filing, with over 2.5 billion "Snaps" created every day by its users, with the average user opening the app 18 times a day and using it for between 25 and 30 minutes per day.
By the end of last year, Snap had a reported revenue of $404.5 million, a 689-percent year-on-year increase, but the net loss for the period of $514.6 million is also greater than the loss the previous year of $372.9 million. Even so, the high $3 billion target for the IPO is said by Theh Wall Street Journal to give Snap a valuation of at least $20 billion, and possibly as high as $25 billion.
The company has been accused of inflating its user numbers to boost its IPO, as part of a lawsuit filed by Anthony Pompliano in January that alleges wrongful termination. The complaint has since been denied by Snap, with a spokesperson describing it as being "totally made up by a disgruntled former employee."
In the filing, Apple is mentioned by name a total of six times, with five referring to ways Apple is a risk to the company. It is noted Apple and Google have extensive control over the iOS and Android operating systems and the major app stores, meaning each can "provide customers with products that compete with" Snapchat, including potentially giving preferential treatment to competitors that "could seriously harm Snapchat usage on mobile devices."
There is an acknowledgement Snapchat is "heavily influenced" by the technology offered by operating systems like iOS, and could suffer from extreme changes to the way it operates. "We may be able to create new products based on advances in their capabilities, but we may also be limited if they choose to block a particular feature or reject new updates in our application."
Snap admits the majority of its user engagement is through iPhones, and has prioritized development of its products on iOS over Android. To continue its user engagement growth, Snap suggests a shift in priorities to put Android development first, with added concern of harm to the business if "fewer people use smartphones with iOS" and if the company doesn't improve its Android products sufficiently.
In terms of "significant competition," Apple is on the list of "larger, more established companies," alongside Facebook's Instagram and WhatsApp, Google, Twitter, Line, Naver, Tencent, and Kakao. Apple, Facebook, and Google are singled out again, with Snap warning the three "could use strong or dominant positions in one or more markets to gain competitive advantages against us in areas where we operate."
Instagram is highlighted as an example of the intense competition, with the filing noting the Facebook subsidiary's introduction of a feature "that largely mimics our Stories" included in Snapchat itself.
The sixth and final mention of Apple in the filing appears in the list of Executive Officers. Steven Horowitz, Vice President of Engineering since January 2015, has previously worked for Google, Microsoft, and Apple, and is also a member of the board of directors at Quotient Technology.
Comments
This is going to turn into another twitter from a stock market point of view. Everyone is going to love them and then eventual the market will ask the hard to answer but simple to ask question of how you make money and how do you grow the business. You would think with Trump raging battle on Twitter and all the people joining to watch the carnage their stock would be going through the roof it is not they have no path forward. SnapTrap (did they on purpose) tried the do the name change ahead of time so not to be associated with picturing take, but it not going to solve their fundamental problem, which is where do that go from there. Yeah they made the next generation of glasshole glasses that was innovative. Facebook is trying to turn themselves into a different company and trying to figure out how to make more money on what that know about its users.
If you buy in do not hold if it make a run jump out and watch for the crash back to earth.
Apple just needs to make sure iMessage (or whatever they call it now) and FaceTime continue to evolve as top-tier options.
Nintendo had the idea even before that(GameBoy Camera) but they abandon everything.
Or somehow invest/make a deal to have a Snapchat iMessage app.
Or Apple can afford their own filters and have idiots say they "copied".
teens use:
Facebook Messenger, Snapchat, Kik, Skype, Messages, FaceTime to communicate.
Adults usually:
Facebook Messenger, Skype, Messages, FaceTime, email and several dating sites to meet
that's way too much!
Apple definitely can't sleep on this market and needs to be THE place to text/videochat etc.
The problem is a lot of teens get junk iKnockoffs and can't use Apple messaging.
I guess Apple can offer android versions for $.99 or free with ads and banners that say "wanna go ad free? Get an iPhone!"
Sad Story:
before iOS 10 released I asked a teen Apple fan "are you excited for stickers in iMessage?" She replies "I don't even use it. " confused, I asked what she uses to text her friends she said "Messenger"(Facebook).
Not to mention a plethora of other messaging platforms that people with an international network have to use to keep in touch: LINE, KakaoTalk, Viber, WhatsApp, WeChat, etc. All this makes the early days of having to use AIM, MSN Messenger, Yahoo Messenger, and ICQ seem so tamed.
Apple's business approach is not well aligned (at all) with a social/advertising network (such as Facebook, Snap, Twitter...the list goes on). Such a network needs to be available on as many devices as possible to grow the subscribers/members, which is the value of such a network (Metcalfe's law). You cannot limit to iOS or the value of that network is destroyed. Apple is about making the best products that people want to purchase, and as we are now seeing, can build services off of that base (services related to content consumption)
What is the synergy with FB? Potential to sell more Apple Music subscriptions? I can think of better ways Apple could spend $370B.