Snapchat has successfully gained popularity amongst millennials. The company is finally set to debut IPO as early as March 17, valuing the firm at between USD20-25b. Lately, we are observing an interesting trend. Facebook appears to be testing Snapchat–like features on several of its properties to compete with Snapchat. Of note, its effort to put photo and video across apps is being accelerated.
For instance, Facebook has launched similar forms of apps (e.g – Poke, Slingshot, Flash, etc.), tested its features across several family apps (e.g., Instagram, FB messenger, WhatsApp, etc.) and so on. In particular, during 3Q16 conference call, Facebook cited,
In most social apps today, a text box is still the default way we share. Soon, we believe a camera will be the main way that we share
Notably, it’s known that Snow App recently declined an acquisition offer from Facebook. We believe this offer reflects solid potential for Snow as a rising photo and video app in Asia albeit terms of the deal were undisclosed. Mr. Lee, the founder of Naver, has a strong ambition to foster Snow as next LINE in Asia and we don’t anticipate Naver will sell Snow to a third party anytime soon.
Why are such self-destructing photo and video apps gaining traction?
We attribute it to its popularity among young users. Young users are mobile friendly and their mobile engagement is higher than older generations. Snapchat and Snow should be attractive gateway for advertisers to resonate their brands for young generation. Despite young generation not having much spending power now, we believe they should be an attractive audience for advertisers on long-term potential.
Snapchat and Snow nearly mirror each other in terms of features but Snow is effectively fending-off Snapchat penetration in Asia. Despite the risk of a potential block in China, Snow has also established the first overseas branch in China. SnapChat IPO will stimulate interest in the Asian Snapchat – Snow and consequently boost share prices of Naver and LINE.