Why Snapchat Won’t Make it Through the Year.


Or will at least be reduced to a ghost of its former self.

Snapchat’s parent company, Snap Inc, is preparing for its initial public offering (IPO) this week. This will be the largest IPO since Alibaba went public in 2014. Speaking of which, Alibaba, the Chinese tech giant, saw a 10% drop in stock prices after its IPO. Twitter and Facebook, Snapchat’s closest related IPO predecessors, both suffered even steeper declines in stock prices in their early months after going public. Twitter prices sunk 25% in the first 6 months after IPO. Facebook prices dropped 50% in their first 5 months.

In comparison to Facebook and Twitter, Snap Inc is limping to the starting line. Snapchat is witnessing seriously concerning drops in user acquisitions, and their price-to-sales ratio will far exceed historical marks when the stock opens at $14–$16. Putting all that aside, Snapchat has much more deep-seated troubles. The nature of their platform itself puts them in serious risk to follow the paths of Vine and Yik Yak on a much larger and more devastating scale.

Snapchat has no user history.

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