Facebook IPO versus Snap IPO

Just looking at numbers :)

It’s probably irrelevant to compare those two separeted events. 5 years have passed, there are two times more smartphones and Facebook has successfully managed to become a highly growing & profitable company through incredible strategic moves: Instagram, Oculus, Whatsapp just to name a few.

In May 2012, Facebook was valued 104 billions, after having raised 2.5B in venture capital and 16B at the IPO. Many people said it was overvalued. Now it’s easy to say it, but I remember at the time how impressed I was by the moves of Mark Zuckerberg and how obvious it felt to me that Facebook would be worth more than 200B in less than 2 years. It actually happened. And it’s now worth close to 400B.

Profitability & Expectations

Facebook was profitable when it went public, Snap isn’t. Just like Twitter in 2013 when it went public, raising close to 2B at a 24B valuation. Twitter has failed to meet expectations. Will Snap succeed? Nobody knows but as for me, I will be always more comfortable betting on a strong founding product CEO who runs his company than anyone else. And many moves from the recent past reveal the strong character and vision of Evan Spiegel for the future of Snap.

Looking at the numbers

I’ve compared the data between Facebook and Snap at IPO. Here is a raw view of those numbers. Below is the spreadsheet I have put together.

Facebook was 3 times larger with 526M daily active users (DAU) worldwide, growing 41% year over year (YoY). It included 119M in Asia and 126M in the rest of the world, growing close to 70% YoY while America and Europe grew by 25% YoY to reach 281M DAU, end of march 2012.

Snap had 158M daily active users end of 2016, growing 48% YoY. It includes 68M DAU for America and 52M for Europe, growing 47% YoY, 39M for the rest of the world, growing 62% YoY.

While Facebook was already big in Asia and the rest of the world, Snap is strong in Europe and America.

The level of engagement matters even more than the number of DAUs.

Facebook had 300M pictures and 3200M interactions per day when it went public. It’s 6.7 interactions with pictures, likes and comments in average per DAU.

Snap has 2500M pictures/snaps sent every day. It’s 15.8 interactions with pictures per DAU. Also note that in average daily active users open the app 18 times a day and that 60% of them send Snaps on a daily basis.

Impressive engagement ratios in my opinion.

Let’s look at the revenue.

Facebook revenue was 1,058M in Q1 2012, up 45% compared to Q1 2011. Net income was 205M, down 13%.

Snap revenue was 165M in Q4 2016, up 415% compared to Q4 2015. Net loss was 170M versus 97M for Q4 2015.

Two interesting facts: In 2007, when Facebook revenue was 153M, the net loss was 138M. At the time, Facebook had about 350 employees.

The average ARPU of Facebook was $1.21 end 2011, up 6% YoY. ARPU for Europe and America was $5.11 (It was $3.08 end of 2009). The average ARPU of Snap is $1.05, up 238% compared to end of 2015.

Revenue growth is impressive with room to grow the ARPU. The net loss is still significant and has increased as well.

What about the number of employees?

Facebook had 3,539 employees end of Q1 2012, up 42% compared to Q1 2011. Snap has 1859 employees, up 210% compared to end of 2015.

It’s challenging to manage such employee headcount growth. It will be interesting to see how the company handles this.

In terms of funding, Snap has raised as much as Facebook more or less, about 2.5B.

To me it makes sense, looking at how the space of mobile consumer apps has evolved and the need for more capital to reach certain expectations nowadays.

Finally, a quick fact because some people seemed surprised to notice that Evan Spiegel owns 44% of the voting rights. Mark Zuckerberg owned 57.3% of the voting rights at the IPO of Facebook.

What’s next…

Snap aims at raising $3B or so at a $25B valuation. Facebook has raised $16B at a $104B valuation. Both operations are spectacular. And there is no debate whether the valuation is high or not. It’s feasible and if I was Evan today or Mark back in 2012, I would just do it. The probability that the stock price plunges during the first year after the IPO is very high. What will be a lot more interesting is to observe the growth of Snap and the next moves of its CEO.

As for: Is Instagram stealing users and engagement from Snap ? Can a camera app be so big ? Yet another debate that doesn’t serve the future of this company. So you tell me…

Here is the spreadsheet I have put together :)