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Snapchat Calls Out Instagram, Admits Company ‘May Never Be Profitable’

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As Snap Inc., the company behind the ephemeral photo sharing app Snapchat, prepares for its Initial Public Offering (IPO), the company is filing papers that call out rival Instagram and reveal profitability may never be a part of Snapchat’s future.

Snap Inc. filed its IPO prospectus on Tuesday, and potential investors are paying attention to a few main points.

The first is that Snap Inc. has always operated at a loss, a fact that might not change for a while… if ever. The company posted a net loss of $514.6 million in 2016 (take THAT GoPro), and the document states (in bold, italicized letters, no less) that Snap Inc. “ha[s] incurred operating losses in the past, expect[s] to incur operating losses in the future, and may never achieve or maintain profitability.”

The second piece of info investors are probably paying close attention to is listed in the prospectus’ “Risk Factors” section: Instagram.

“We face significant competition that we anticipate will continue to intensify. If we are not able to maintain or improve our market share, our business could suffer,” reads the document. “For example, Instagram, a subsidiary of Facebook, recently introduced a ‘stories’ feature that largely mimics our Stories feature and may be directly competitive.”

Both of these facts should be troubling to investors, but enthusiasm about Snap Inc.’s IPO isn’t waning. According to Bloomberg, the company “could fetch a valuation of as much as $25 billion.”

(via Resource Magazine)


Image credits: iPhone with Snapchat by barnimages.com.

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