If you’re not part of the social world or are over the age of 22, you may not have a lot of use for SnapChat. In fact, the company has been losing users for some time now and not really attracting any new ones.
So how is it, then, that SnapChat has just raised $1.81 billion in another series of funding? That’s the question that all social experts want to know right now.
The Appeal of SnapChat
What is it? Quick videos? Fast flashes of lives and followers? The entire concept of what SnapChat is and stands for? It’s hard to say. SnapChat is still popular with the teen and tween crowd, but it never really caught on with users older than that - unless those users were logged into a SnapChat account for marketing purposes.
SnapChat was popular at one point, but that popularity has kind of started to dwindle. In fact, the company has reported some losses as of late. So why would investors sink a ton of money into an app that’s not really growing? It might have something to do with plans that SnapChat has down the road. Maybe.
Things in the Works?
Is SnapChat working on something that will add value to the app? Is this something that investors know about but other people don’t? Right now, the company is still valued at $20 billion - a massive number for a company that’s not really that impressive on paper. The company itself has told press that the valuation isn’t really justified given the shaky revenue that SnapChat brings in.
The other reason why investors could be looking at SnapChat might be that there’s a trend happening. A trend that may lead to SnapChat growth. Still, it’s hard to figure out why SnapChat is getting so much money - or why the company is so highly value. Oddly enough, tech companies like SnapChat seem to get crazy valuations that would not really fly in the ‘real world.’
The Oddity of Apps
If a brick and mortar company were to show shaky revenue and a loss of users, that company would like see its stock drop and investors back off. But that doesn’t happen in tech or with apps. When it comes to apps like SnapChat, investors want more and numbers aren’t really telling. SnapChat isn’t attracting advertisers either - the main way that the company generates revenue.
So here we have a company that doesn’t have an increase in users, is overvalued, does not have steady revenue streams, and cannot attract advertisers gaining billions in additional funding. All of this makes me think that SnapChat is working on something new and great that the tech and tech investment world is going to love and want more of.
Otherwise, none of it makes any real financial sense.
Then again, that’s the tech world for you. Overvalued apps and companies that somehow generate more and more funding without any real reason or numbers to back it all up. What are your thoughts on this new round of funding for SnapChat?