Snapchat has Challenging First Year

Heading into 2017, one of the most highly anticipated IPOs in the stock market was that of Snapchat. Snapchat had developed a reputation for potentially being the next Facebook or other wildly successful social media platform. Because of this, the company saw a significant amount of initial investment interest when its IPO debuted at around $25 for sure. While it initially traded for much higher than its initial value, it has ended up having a pretty difficult first year (https://www.fool.com/investing/2018/01/10/snap-is-suffering-from-major-engagement-problems.aspx).

Ever since it has been released, trading the stock has been quite volatile and it is now down more than 40% compared to its highest point. There are a number of different reasons why this could be the case. One of the main concerns about the company is that it has a declining amount of daily active users. The concern for the company isn’t necessarily the amount of users it has, but is instead the amount that go onto the platform on a daily basis. Overall, the company has nearly 180 million unique and regular users. However, it is estimated that only around 10% of those actually go on daily and this figure is declining.

At this point, the future and direction of the company are not completely clear. While the amount of users that go on daily is not too exciting, the actual demographic tends to be teenagers and young adults. Both of these are very important markets for companies, which increases the amount of potential revenue the company could bring in.