Maybe it’s a case of reverse psychology. The less it makes financial sense, the more people think there must be some hidden gimmick. What if Snapchat were just a millennial prank and not a future social media success at all?
After all, it turned down Facebook’s offer to buy it out. It's stubbornly anti-content with its short-lived posts, so there’s no long term value in the content. It’s like the hype that builds around the guy who keeps turning down jobs – he’s the one who keeps getting promoted.
Snapchat may be popular right now, but that doesn’t mean it’s profitable.
Why would an anti-brand where content self-destructs within 10 seconds attract and maintain the tribal following social media needs to make money?
It certainly hasn't so far. Snap has never made a profit. It lost US$500m last year. Still, despite the poor track record, its value of US$24bn at IPO far exceeded its US$1.5bn net worth.
One key to this kind of numbers gap has to be the PR story that’s rolled out alongside the financials.
With Snap, you could argue the watchword was less bottom line more bikini line.
In the lead up to its IPO, much was made about Snapchat’s early reputation as a consequence-free sexting app.
Meanwhile, the company’s 26-year-old chief executive, Evan Spiegel, is paraded like a new Hollywood celebrity with his fiancée Miranda Kerr. He's the American Dream come true with a net worth of US$6.2bn and a beautiful girl on his arm. He probably had a picture of the Victoria’s Secret model on his wall at Stanford University.
Kerr clearly loves bathing in the LED limelight. She captured all the IPO action as it happened and posted directly to her Snapchat story. What else do you expect when her fiancé announced their engagement on Bitmoji?
The prospect of profit from Snap may be as ephemeral as the ghost on the company’s logo, but for many, all the hyped dotcom glamour is worth the gamble.
Snap Inc has torn up the rule book. Who cares about business plans or profitability? By accident or design, the net effect is it's just too darn cool for school.
The more perplexing and incomprehensible the business plan, the more old-time investors are loving it, petrified that it might look like they can’t keep up with those ‘crazy kids’.
They see the steady growth at Facebook as profits soar – last year’s Q4 advertising revenue grew 53% – and cross their fingers for a similar story arc, but Snapchat is not the same animal.
Snapchat is still in diapers. It positions itself as a “camera company”, has only 158 million daily users – most under 35 years old – and no viable revenue stream to date.
Hold on, though, the rebel millennials’ go-to app has been talking TV and forging partnerships with brands like ABC, Disney and Turner.
Marketeers keep looking to traditional models to analyse its stickability long term, but there is no such thing as brand loyalty here. Snapchat’s target audience has the attention span of a gnat and its indy adolescent charm is sure to wear thin soon enough.
The millennials are pranking old timers desperate to see Snapchat in its glorious emperor's new clothes, but they'll look in vain.
The naked truth is plain to see – with or without those gimmicky specs. The dotcom fantasy sweeping Wall Street is nothing more than a driver-less car crash waiting to happen.