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Snap’s Earnings Include a Warning for Investors. What to Know?

TODAY’S SNAPCHAT IPO UPDATE Snap, Inc. is issuing a surprise warning to investors in its IPO prospectus that the explosive growth of the company’s user base may not last long, and that the company needs to deliver more profits. An update was buried in today’s brief stock market debut. [See More Notes about IPO Here.] Snap has grown fast in the last couple of years thanks to increased use of its camera-enabled app for sharing photos and videos on social media platforms, but some investors see those customer growth rates as unsustainable. (Reuters)

Snap’s rapid growth has made Snapchat a money-making machine for parent company Snap Inc. (owned by media firm Snap Inc.) Despite slower revenue growth, Snap turned a $372 million profit on revenue of $404 million for the first time in the first quarter, while being valued at $28 billion. (Reuters)

Snap is getting more directly involved in daily business activities, and it’s making that more visible to prospective users. Snapchat launched a “busy feed” feature last week that allows business users to post images that are relevant to their message boards. (First Draft)

Snap is seeing slowing user growth in some regions, namely Asia. However, Snapchat said revenue from its distribution business, which sends content from publisher partners to users, is growing at a “double-digit” rate. (CNBC)

If Snap gets acquired, it could fetch more than $25 billion. While that number seems less outlandish as we approach the end of June, Snap is expected to carry a pre-IPO market cap of somewhere between $12.5 billion and $18.5 billion. (WSJ)

Snap made a decision this month to stop funnelling money to Google. But Google isn’t clear whether that’s a wise move. The tech giant is ultimately responsible for the majority of “bellwether” Alphabet’s “other bets,” which include Google Ventures, Google Capital, Fiber, Calico, Verily, X, and other corporate ventures. (VentureBeat)

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