Picture this: founders refuse to sell shares in a company they believe in.
Snap Inc has reported a near quadrupling of Q2 losses despite revenues doubling from a year earlier.
The owner of the social media app beloved of teens and twentysomethings reported that revenues more than doubled to $182m from $71.8m a year earlier.
However, losses at the company almost quadrupled from $115.8m a year ago to $443m.
The losses are believed to have been accrued in the face of intense competition from Facebook and its WhatsApp and Instagram subsidiaries, which, in the past year, have copied many of the Snapchat app’s key features. These include services identical to Memories and Status, with plans to mimic future scripted TV show-like content.
Despite Facebook’s efforts, however, Snapchat is still the medium preferred by younger tech users who liken the former to attending awkward family gatherings.
Snapchat’s daily active users grew from 143m last year to 173m in Q2, up 21pc year-on-year. The average user creates 20 Snaps a day and Publisher Story views are up 30pc quarter-by-quarter.
The number of original shows that premiered on Snap doubled and some are getting more than 10m views an episode.
Around 250m Snaps are saved to Memories every day.
Average revenue per user was $1.05, up 109pc over 50 cents a year ago.
Interestingly, Snap generated $5.4m in ‘Other’ revenues, suggesting sales of devices such as its Spectacles camera sunglasses are going rather well. At $130 a pair, it is estimated that 41,500 pairs of Spectacles were snapped up in Q2.
In March, Snap raised $3.4bn in its IPO, which was more than it had sought, valuing the company at $25bn.
Will Snap crack or pop?
Snap was founded in Stanford University by Evan Spiegel, Bobby Murphy and Reggie Brown while they were students.
After an intense legal dispute over ousted Brown’s role in co-founding the company, he received credit for helping to conceive the idea and was paid before the IPO.
In a sign of their confidence about Snap’s prospects, CEO Spiegel and co-founder Murphy said they have no plans to sell any of their shares in Snap Inc this year, despite a lock-up period expiring at the end of July.
“Given the amount of speculation around the lock-up expiration, I feel it is important to note that Bobby and I will not sell any of our shares this year,” Spiegel said on a call with analysts.
“We believe deeply in the long-term success of Snap.”