Snapchat Is Well-Positioned for Its IPO, With One Caveat

The company may never be profitable

Snapchat is growing up and seems well-positioned for an initial public offering. A pair of reports from Verto Analytics gives insight into the messaging application’s near future by examining time spent on Snapchat, along with U.K. demographic data.

In the past, Snapchat has been criticized for its lack of transparency regarding user data. But with the IPO on the horizon, CEO Evan Spiegel is focused more on provable, hard metrics, including the time users spend in the app.

While it’s no surprise that 18- through 24-year-olds are the biggest group using Snapchat, the time they spend on the app is a little more of a surprise. According to Verto Analytics‘ data, this segment of users spent a cumulative 3.5 million days using the app in October 2016 alone. Those aged 25 through 44 spent what amounts to 2.5 million days during the same period.

Overall app use time almost doubled from May to October 2016–an indication that users are engaging heavily for sustained periods of time. And while the U.K. audience is not as diverse or engaged as the U.S., they still spent more than 2.5 million days per month using the app. The increase in engagement has been concurrent with potential ad revenue, but this may not guarantee success.

Snapchat filed its formal IPO Feb. 2, and the documents included telling information about the app’s expected trajectory. According to CNET, user growth is slowing and most advertisers are only testing Snapchat with proof-of-concept campaigns. Additionally, within the filing, the company admits that it expects operating losses to continue and notes that the app  “may never achieve or maintain profitability.”

These concerns are the same that have dogged Twitter since its IPO, and it is still very much part of the social media landscape, but there are no signs of Twitter shutting down. It doesn’t seem to matter how well Snapchat does on the stock market, because no other company seems able to even come close to competing with it–except maybe Instagram.

Publish date: February 7, 2017 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT