Is Snapchat A Long Term Play?

A lot of venture capitalists are convinced that Snapchat is the Facebook killer. They look at Snapchat as this upstart technology that has succeeded in robing Facebook of audience growth. Snapchat is much bigger now than at the stage where it was. In talks of being bought out by Facebook, it appears to be the one fish that got away which then proceeded to grow in to a giant whale. It is very easy to fall into this narrative. It is very easy to think that Snapchat is the next big thing and would be a breakaway IPO. I have serious doubts about this.

First, Snapchat is a one trick pony. It is a platform that ensures that your messages to your friends have a short life. That is all it is. While they can add all sorts of bells and whistles, it is still a mobile device functionality that gives you privacy. This is all well and good but it really is just a niche product. It is just a secured form of communication and I am still not convinced that this type of technology is worth billions upon billions of dollars.

If you were to compare it to what Facebook brings to a table, it really is no comparison. Facebook is not just a website, it is not just a device, it is actually a platform that can impact all sorts of other websites and all sorts of other third party mobile and web site functions. This is how Facebook has been positioned.

You are able to deliver a high level of social interaction to your web content by simply adopting easy-to-install Facebook features. Snapchat, on the other hand is just purely a mobile play. It really is no comparison and I do not expect revenues for Snapchat to increase dramatically enough to justify its share price. Once it goes IPO, expect this company to follow the same pattern as Twitter and Facebook. Expect it to start off big and then crash, and then hopefully turn around. If it can turn around, that is an open question.

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