SnapChat's Value is Extremely Questionable

It worries me to make a specific prediction such as "SnapChat is worthless in the long run" because specific predictions have a way of being wrong. But what I have complete confidence in saying is: SnapChat's value is extremely questionable.

While assessing SnapChat from arm's length, it is worth taking a look at Twitter's position. The two companies are compared quite often, fairly or not, but I happen to agree with the assessment that they provide insights into each other's market possibilities. Twitter is a confused noise of politics, news, sales, pop culture, and customer service... an illogical mixture that works because of the personality of the users, not their use-case. Twitter's monetization and expenses (especially the expenses) are just as difficult to logically understand. Twitter's large active user-base of nearly 320 million users who log in at least monthly generates the company US$2.5 billion dollars per year in revenues.

While SnapChat is much younger than Twitter, its user-base is already estimated at between 200 and 300 million and its earnings have experienced a meteoric rise to an estimated $300 to $350 million in annual revenue (admittedly based on some outdated 2016 projections). From this perspective, Snap Inc. looks good on paper... but then again, except for the half billion dollar annual operating losses, so does Twitter.

With Twitter, we look at the user-base, revenues, and (negative) profits, and we see an organizational and management problem. On the other hand, the biggest concern with Snap Inc. can't be contained to revenues or growth charts, because that's where they excel. Instead, Snap Inc. lacks a number of key abilities at their executive level such as: foresight, compatibility, and professionalism.

Addressing professionalism first, because it sounds like the harshest of my charges, I'll say that most of Snap's employees may be perfectly professional, with a key exception detailed later, but the toolset to allow businesses to manage their SnapChat operations isn't professional, in fact, it doesn't exist at all. In other words, SnapChat isn't "professional" because they don't offer professional tools for business. Want to manage a campaign? Well, you're downloading SnapChat on iOS or Android like all the other users.

In addition to not having a viable interface for business, there is absolutely no Windows, OSX, or Linux support, and not even a web application! Mobile may be all the rage, but not being able to use SnapChat on Windows laptop, a Chromebook, or on the web is a major deal-breaker in my ability to say that a company knows how to provide users with sustaining value. Device agnosticism be damned, because not only does SnapChat not offer these customer access point, co-founder Evan Spiegel has gone so far as to publicly profess his hatred of Windows. I'd say, "What an asshole!" but Jordan Crook at TechCrunch beat me to it. Such lack of professionalism (and now we've come full circle!) obviously prevents Snap Inc. from exhibiting the foresight that will keep it viable over the next decade; at least with their current management, that is.

Financial Disclaimer: While this opinion piece is timed to coincide with Snap Inc.'s IPO, the information in this editorial is not to be taken as financial advice.

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