1. TechSpot is dedicated to computer enthusiasts and power users. Ask a question and give support. Join the community here.
    TechSpot is dedicated to computer enthusiasts and power users.
    Ask a question and give support.
    Join the community here, it only takes a minute.
    Dismiss Notice

Snapchat loses way more money than it makes

By Scorpus ยท 13 replies
Feb 2, 2017
Post New Reply
  1. Snap Inc., the parent company behind Snapchat, filed today the relevant documents for their initial public offering (IPO). These S-1 documents give us a first glimpse into the company's operations, revealing exactly how much money Snapchat generates and how many users the service has.

    Currently, Snapchat is losing a ton of money. In fact, they're losing significantly more money than they generate, leading to a cost of revenue that's higher than the revenue itself. In 2016, Snap Inc. reported revenues of $404.4 million, but it lost an enormous $515.6 million through the same period. These losses are up significantly from 2015 when Snapchat made a $372.9 million loss on $58.7 million of revenue.

    The S-1 filing has also reveals that Snap Inc. pays $400 million per year to Google for cloud services. In other words, the amount it costs to host Snapchat's infrastructure is only slightly less than their yearly revenue.

    Snap Inc. admits in their filing they "have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability."

    As expected, Snap is hoping to raise $3 billion from this IPO to give the company a valuation north of $20 billion. With the company in such a weak financial state, and the disappointing long-term results of IPOs from similar companies like Twitter and Groupon, Snap Inc. may struggle to reach these targets.

    The IPO did reveal that Snapchat has 158 million daily active users, with growth appearing to continue. 43% of Snapchat's users are in North America.

    Permalink to story.

     
    Last edited by a moderator: Feb 2, 2017
  2. Evernessince

    Evernessince TS Evangelist Posts: 4,008   +3,501

    "The S-1 filing has also reveals that Snap Inc. pays $400 million per year to Google for cloud services."

    This is the obvious area of improvement. They need to cut out the middle man and stop paying google 50% more. They should not be spending this much of their budget on cloud services, they aren't exactly streaming ultra-hd tv or shows.
     
    Teko03 and H3llion like this.
  3. PurpleYoda

    PurpleYoda TS Enthusiast Posts: 46   +15

    So...they make no profit now and may never make any in the future yet.. they ask for more money..? What am I missing?? Is it charitable operation or something? Cut your loses, sell the business and move on to something else that actually CAN make you money like I don't know... CLOUD HOSTING and offer it to your buyer?? 8-O Clearly they're in the wrong line of business! ;-D
     
    dms96960 likes this.
  4. JaredTheDragon

    JaredTheDragon TS Guru Posts: 583   +383

    I'm really going to miss my girlfriend attempting to "snap" me with sub-par, terrible "filters" to her other boyfriends or sisters or whatever. Oh, darn.
     
  5. captaincranky

    captaincranky TechSpot Addict Posts: 14,975   +4,009

    So does Tesla Motors, but yet its stock prices keep going up. Go figure..:confused:
     
  6. JaredTheDragon

    JaredTheDragon TS Guru Posts: 583   +383

    They were posting profits even before they had a product. Same with Space-X. Same with Facebook. Hell, Zucky and Musk were even worth billions before any profits - magically. $13.4 billion, both, in separate times in separate involvements. Where did all that (fake) money come from? Take a guess.

    If you guessed Langley, you were correct.
     
  7. captaincranky

    captaincranky TechSpot Addict Posts: 14,975   +4,009

    Tesla barely has product now!
     
  8. Skidmarksdeluxe

    Skidmarksdeluxe TS Evangelist Posts: 8,647   +3,286

    Meh. If it's a money loser then what's the point of it?
     
  9. captaincranky

    captaincranky TechSpot Addict Posts: 14,975   +4,009

    These dot-com parasites think it's you responsibility to "throw good money after bad", so they'll be, become, or stay, multimillionaires.

    "Oh no, Snapchat is going under, how will I be able to continue wasting precious time that I could have used toward being a productive human being"? "I better quick piss my money away on a 1000 worthless shares of that crap"!
     
    Last edited: Feb 3, 2017
  10. Theinsanegamer

    Theinsanegamer TS Evangelist Posts: 1,550   +1,768

    Snap Inc. admits in their filing they "have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability."

    Nobody in their right mind would buy this stock.

    Amazon looses money, but that is because they are so heavily investing in infasstructure. They could stop today and be hugely profitable.

    Tesla is a startup, and is still incurring high costs from early deployments, while taking on the titans that are the car manufacturing "old guard". They have already shown high demand for their products, and were actually capable of turning out a profitable quarter more then once IIRC.

    Snapchat? There is no profit there. They are just an add sponsored pic site, nothing more. Those are a dime a dozen. And given this one is tied to facebook, I dont see why anybody would actually WANT in on this. Snap is openly admitting they will not make money, and sooner or later, these dot com companies will realize you need to make a profit at some point if you want the lights to stay on.
     
    drjekelmrhyde and Teko03 like this.
  11. gusticles41

    gusticles41 TS Guru Posts: 403   +466

    You can't put a price on booty pics.
     
  12. gusticles41

    gusticles41 TS Guru Posts: 403   +466

    Wonder if Google will look to buy them out in the future and make this a profitable venture.
     
  13. captaincranky

    captaincranky TechSpot Addict Posts: 14,975   +4,009

    Actually, you can. "Met-Art", "Femjoy", "MPL Studios", and so very many others do it all time. Generally, it runs about $100.00 USD, for 6 months to a year.

    Plus, keep in mind, you generally can't pleasure yourself by looking at stock certificates. Although, if you bought Apple stock maybe 15 years ago and still have it, you might be able to get off with that.....(y)
     
    gusticles41 likes this.
  14. BadThad

    BadThad TS Booster Posts: 181   +91

    The IPO is being used to generate more cash burn, a sign of desperation.
     
    drjekelmrhyde likes this.

Add your comment to this article

You need to be a member to leave a comment. Join thousands of tech enthusiasts and participate.
TechSpot Account You may also...