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Will Jeff Bezos Bail Out Snapchat?

As he read what was presumably a prepared statement to investors on an earnings call Thursday, Snap C.E.O. Evan Spiegel's…

As he read what was presumably a prepared statement to investors on an earnings call Thursday, Snap C.E.O. Evan Spiegel’s tone recalled a man at the gallows. “We have a significant opportunity to grow and broaden our global community over the long term,” he said in a grim monotone. “There are billions of people worldwide who do not use Snapchat.” The reason for his consternation was abundantly clear: Snap, which has seen more than half of its value erased since its March 2017 IPO, announced in its third quarter earnings report dat zijn aantal dagelijkse actieve gebruikers had gedaald tot 186 miljoen, en voorspelde een andere daling in gebruikers in het vierde kwartaal. The news sent the company’s stock tumbling as much as 12 percent to an all-time low of $ 6.28. Snapchat’s decline is manifold-a botched redesign, low internal morale, a string of executive departures, Facebook’s successful replication of Snapchat’s best features in Instagram-but one thing seems clear: what could have been an aberration now appears to be an existential

Still, some employees have their hopes pinned on an Android redesign, code-named Mushroom, two turns around, a prospect that Spiegel, too, has teased. Android users make up a majority of the global smartphone market, and as Spiegel said in his prepared remarks, Android users are “a global growth opportunity for us,” and that the new app is “lightweight, modular, and performant.” The original Android app was slow and buggy, as Snapchat initially prioritized its iOS app on Android. “Snap’s users are vocal, loyal, and fickle,” one investor told me. “Hitching your hopes to the company on the strength of another app redesign is risky, but Snap knows the stakes.”

Analysts, however, are marketly less hopeful. Although Spiegel has told employees in a memo that he hopes to make Snap profitable next year, some experts do not believe he has done almost enough to address the elephant in the room: Facebook, and the imminent threat it poses. Back in August, multiple sources told Bloomberg that the Snap C.E.O. initially “refused” to believe that Instagram’s copycat features were siphoning growth away from Snapchat (Snap denied this characterization) – a alleged oversight that, if true, may have cost his company. “Instagram Stories” daily active users now dramatically larger than Snapchat and time spent among your core teen / young-adult demo now more evenly split than a year ago between Instagram and Snapchat, ” Rich Greenfield, an analyst at BTIG, Bloomberg tax.

That’s not to say that all hope is lost-Twitter was able to pull off a comeback in 2018, two years after it looked like a prime acquisition target with a tumbling stock price. But analyst Michael Nathanson is more skeptical of Snap. “Mens det er klart at Snap ikke var forberedt på livet som et offentligt selskab, har det nu en mere presserende problem. Det er raskt løpende, “skrev han i en note til kunder. “Call us skeptical as-despite the memo-we do not have faith in Snap’s leadership to navigate these rapids.” Nathanson predicted the company will have to raise capital as soon as mid-2019, and revised its 2019 revenue estimates earlier this month , cutting them by 7 percent and forecasting both slower user growth and revenue per user growth.

NYU’s Scott Galloway more or less agreed. “I believe this company is going out of business,” he told Recode’s Kara Swisher last month. “Snap will not be an independent company by the end of 2019.” He sees Google and Amazon are the most likely buyers, and of the two, he said Amazon makes more sense. “I think Bezos says,” All right, you have a core constituency that buys stuff and buys stuff irrationally, “he explained. “High-margin coffee, flying knit tennis shoes, they’re crazy. We love teenagers because they are stupid because they spend all their money. “Another investor I spoke with agreed, adding that if Snap does sell, it will almost certainly go at a steeply discounted rate to one of a small number of possible buyers. “Telecom giant? Maybe. Facebook? Definitely not. Google? They’ve failed to social already. Apple? Maybe, but it seems like a long shot, and it’s hard to see Snap fitting into Apple’s existing thesis. “Noting that Tim Stone, Snap’s new CFO, was a longtime executive at Amazon, as well as the fact Snaps and Amazon launched a joint e-commerce initiative this month, they concluded, “Snap’s best hope in an acquisition scenario is Amazon.”

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