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posted on 17 March 2017

Snapchat Still Has Some Growing Up To Do

Written by , Statista.com

-- this post authored by Martin Armstrong

Snapchat went public with its IPO 02 March, 2017 (NASDAQ:SNAP), producing a peak company value of around 40 billion dollars one day later, making it the biggest U.S. tech IPO since Facebook. Econintersect has added commentary to the end of this post.

While this initial valuation is impressive, some are questioning the longevity of an app which relies heavily on users at the younger end of the scale. As the chart below shows, when compared to Twitter and Facebook, the age spread of Snapchat users is much more weighted to the 18-24 years group (Comscore only surveyed adults). Facebook enjoys a much healthier spread of U.S. smartphone owners. Although Twitter users are also rather more youthful, the differences aren't anywhere near as pronounced as with Snapchat. It could be that Snapchat has some growing up to do if it is to thrive in the long-term.

This chart shows a breakdown of Snapchat, Facebook and Twitter app users in the U.S. by age group.

Infographic: Snapchat Still Has Some Growing Up To Do | Statista You will find more statistics at Statista.

Notes added by Econintersect: SNAP has been declining persistently since topping out intraday 03 March 2017. So the mrket valuation fo the company has been moving back toward the $24 billion implied by the IPO offer price of $17. (Chart from Investing.com.)

snap.chart.2017.mar.17

The financial data sumarized below by Google shows why there is much skepticism about SNAP's future: As fast as revenue has grown it has not come close to making the company profitable. In fact the last two quarters have shown a marked flattening of profit margin and operating income improvement at loss levels of -135% and -125%, respectively.

Click for larger image.

snap.financials.2017.feb

If no improvement in the quest for profitability occurs in the next quarterly report due at the beginning of June, it is hard to see how SNAP can fail to break below the IPO offering price of $17, and stay well below that level for some time.

And, the way things are trending, it may not take until June to break the IPO price. It could happen as early as next week.

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