Analysis N°1
The fact that the Smartphone market is booming leads to the growing popularity of applications such as Snapchat.
The fact that the Smartphone market is booming leads to the growing popularity of applications such as Snapchat.
Snapchat could also benefit from the significant development of teleworking. With more and more people working from home, there is an increasing dependence on instant messaging tools.
Snapchat could attract more companies and advertisers thanks to its international dimension.
The recent scandals that have affected other social networks and instant messaging services are of course benefiting Snapchat, which is currently the only application that allows automatic deletion of messages and photos. Confidentiality therefore remains one of the company's strong points for the future.
But, the competition that Snapchat faces is always very present and multiple. It is therefore essential for the company to continue the race for innovation in order not to lose market share.
Snapchat's innovation capabilities, particularly due to the lack of profits and therefore a lower investment capacity in R&D, remain problematic to stay up to date and offer new functionalities.
Snapchat also suffers from certain legal restrictions in some countries that reduce the chances of international development and growth.
Finally, Snapchat still relies heavily on the IT infrastructure. Indeed, for instant messaging to be considered as quality, it is essential that the bandwidth and speed in the region of use are optimal. There are still many service quality problems.
The Snap Company, previously called Snapchat, is known for creating a free photo and video sharing application for mobile phones. It was created by students from Stanford University in the United States. Although this photo sharing system is not original, Snapchat’s time limit aspect on the viewing of media sent by users is unique. This time period varies between 1 to 10 seconds.
Snapchat was recently introduced onto the stock markets; it was valued at 24 billion dollars in the beginning of 2017.
The profits of the Snap Group are generated in several ways, here are the major ones:
Snapchat is currently one of the most popular social networks in the world. However, even though it has successfully won over its users’ hearts, the company remains strongly rivalled by various other big companies. It is essential that you’re familiar with Snapchat’s competition before you begin trading its shares, which is why we want to provide you with a worldwide ranking of the biggest social networks in terms of number of users.
The Snapchat share price is currently quoted on the Main Market of the NYSE and integrated into the calculation of the Nasdaq stock market index.
To enable you to better understand how the Snapchat share price may vary in the future we offer you the opportunity here to examine with us the recent economic and financial history of this company with the dates of important events relating to the company.
In 2016 the Snapchat Group purchased the Canadian company Bitstrips, publisher of the Bitmoji application that enables the creation of personalised avatars in cartoons, for 100 million dollars. Still in 2016, Snapchat bought the Vurb application that enables the reservation of events and services close to people’s homes for an amount of 110 million dollars. Finally, around September, Snapchat announced a change of name to Snap Inc as well as the launch of a pair of sunglasses connected and equipped with mini cameras, called Spectacles.
Before you start trading Snapchat shares, it is essential to implement a quality strategy, especially if you are considering taking a long-term position. In this case, the ideal is to know the strengths and weaknesses of this value in order to determine as precisely as possible its evolutionary capacities. First, we invite you to discover the strengths of Snapchat.
The first advantage Snapchat has is of course its user base. The Snapchat group currently has more than 166 million users worldwide. But this does not stop there, since each year, this figure increases by an average of 36%, which should lead to a doubling of users over the next two years.
Snapchat also differs from its main competitors by the uniqueness of its application. Unlike other social networking and image sharing software, Snapchat allows automatic message deletion. What was considered a defect when this application was released has now become a strong point in view of the controversies that affect data security in most of its competitors. This application for mobile phones is also more robust than those of Snapchat's main competitors. In any case, this is the result of various recent research that has reassured consumers.
Snapchat has also chosen to base its strategy on a younger target group of users than its competitors. Thus, it has a majority of teenagers and young adults in its regular users and this target is ideal for a future evolution of Snapchat's offer which has everything to gain by retaining its existing customers over the long term.
To make its users truly addicted and loyal, Snapchat can rely on a fun interface that is mainly based on visual content. However, it has been shown that images are more stimulating than written content and are intended to be more attractive to the human brain.
As we have just seen, Snapchat shares have many advantages and strengths that could encourage investors to focus on a medium- to long-term bullish strategy. But before taking such a position, it is of course essential to also know the weaknesses of this company that can tip the balance towards a more mixed or downward trend. Here are the main weaknesses of this value.
Snapchat's first weakness is directly related to the undervaluation of its share on the stock market. Indeed, after a failed IPO on the stock market in 2012, the group still fails to attract and convince investors. This damages its brand image and slows down its development.
It should also be noted that the Snapchat group is struggling to diversify its activities in order to generate more income. Indeed, since its creation, the company has tried several times to diversify into different areas of what its main activity offers without any success since most projects have ended in failure with the consequence of a significant loss of money for the company. This was particularly the case with the Snapchat Spectacles application, which failed very badly.
While we can welcome the almost constant increase in the number of users of the Snapchat application, these figures actually lack transparency. Indeed, we notice in parallel that the activity models of the average user of this application become, over time, more and more irregular. The number of users who are really active and therefore potentially profitable has been falling sharply for several years now.
Another weakness concerning Snapchat and its stock market share concerns this time the group's own business model, which depends more and more on advertising in order to achieve its turnover. Indeed, since the application offered to the general public is free, more than 96% of the company's turnover comes from advertising. While this model is well suited for other digital companies such as Google or Facebook, it does not seem to really adapt to the activities of Snapchat users.
To conclude with the disadvantages of Snapchat, we can also deplore an excessive comparison of this application with the Facebook social network. However, Snapchat's model is totally different from that of these two competitors and the functionalities here are much more limited. We also know that consumers prefer to use applications such as Facebook's Messenger or Whatsapp as instant messaging rather than Snapchat, which has some limitations here.
