The picture-sending service Snapchat is raking in $3.4 billion on Wall Street. The app is popular because social scrutiny is low.
New stock market bet in New York Photo: ap
Although the U.S. company Snap makes more losses than sales, it made a phenomenal start on the New York Stock Exchange on Wall Street. Thanks to the smartphone application Snapchat, the company collected about 3.4 billion dollars (3.2 billion euros) – with the sale of only 15 percent of the shares.
It’s a bet on the future that some traders view with skepticism. Snapchat has yet to prove whether it is forming a viable business model. Right now, the app is popular with its target audience, 16- to 24-year-olds. Reportedly, 60 percent use Snapchat in the United States. There are also millions in Europe.
The appeal is to send photos between smartphones that disappear after one to ten seconds have passed at the recipient’s end. Young people can enhance their smartphone snapshots with pictures, symbols and scribbles, making them even funnier.
Because the pictures immediately burn up in the digital orbit, people send out nonsense that they would otherwise not dare to post. There is little social control. Likes and public comments like on Facebook don’t exist on Snapchat. Text hardly plays a role. Young people are not constantly under pressure to be judged from the outside.
Like other free Internet applications, Snapchat has to earn money with advertising. It works something like this: "Companies are very interested in placing suitable advertising with the help of so-called geolocation filters," explains Timm Lutter from the Internet association Bitkom.
Revenue with advertising
"The app on the smartphone does this by recognizing the location where the owner is staying, such as a bar or a movie theater. These immediately provide information with which the smartphone customer can garnish sent photos. The advertising message thus reaches his friends," says Lutter.
This advertising is already working well in the U.S., and is likely to spread in this country as well. Currently, Snapchat already regularly provides new filters to change the photos. There are special Berlin filters for users in Berlin, and even tailored offers exist for individual schools. If one is standing in the schoolyard, one can use certain icons that are only assigned to this school.
Currently, Snapchat is said to have 158 million active users. Recently, however, the growth has declined because Facebook has incorporated similar functions into its Whatsapp and Instagram programs. So the question is also whether Snapchat are able to hold their own against this competition.