Snap: social media company should pass on the glasses

Snap Inc Update

Being small has its advantages. Snap has avoided the worst of the techniques, as evidenced by the lack of antitrust hearings. While big rivals are under the watchful eye of lawmakers, Snap has spent time building self-service advertising options, improving Android apps and delivering more content to its users.

Scrolling a few years ago, the position of snaps in the sky on social media Dangerous.. Instagram duplicated its best features and swelled to a billion users. Advertisers have poured money into Facebook, leaving behind a small platform for fighting for scrap.

But by focusing on content, Snap has retained the whimsical young users and won even more.Social media platform currently has 293 million Daily active users — More than one-fifth more than last year. This is the highest user growth in four years.

Rewards are average revenue per user of $ 3.35, up from $ 1.40 for the same period in 2018. ARPU is growing at twice the pace of Facebook, albeit on a small scale. This growth rate should continue if Apple’s privacy changes continue to make relatively small differences in Snap’s advertising plans.

Bar chart, title ARPU rising Average revenue per Snap user ($) G1410_21X

But if that fails, Snap will continue to strive for profit. Ten years after its founding and four years after its listing, Snap still reports losses. These are at least narrowing, down more than 50% in the previous quarter to $ 152 million. Reducing infrastructure costs and raising advertising prices are paying off.

The catch is that Snap refused to abandon its plans to become a hardware tech company. Despite a failed mass production plan and a $ 40 million write-down in 2017, we continue to produce a small number of augmented reality glasses called Spectacles. This year we made the largest acquisition to date with the UK-based Wave Optics, an AR display supplier. Over $ 500 million.

Despite Facebook, Apple and Microsoft investing in this idea, current forms of AR glasses are unlikely to become widespread. Hostility to technological intrusions into personal privacy is increasing, not retreating. Snap will strengthen its investment proposals by pursuing diversification with greater expectations.

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