Snapchat Goes Public In Largest Tech IPO Since Alibaba
AUDIE CORNISH, HOST:
The company behind the popular video messaging service Snapchat went public today, and it was a rousing debut. Shares of Snap closed up 44 percent on its first day of trading. The company's core audience, 18- to 34-year-olds, is highly sought after by advertisers. And despite the exuberance, Snap faces the perennial challenge for all tech companies - how to make money. NPR's Sonari Glinton and Youth Radio's Natalie Bettendorf report.
SONARI GLINTON, BYLINE: In the interest of full disclosure, I'm on Snapchat, but I don't understand it that much. And what I do know I've learned from my best friend's 17-year-old and my colleagues at Youth Radio like Natalie Bettendorf.
NATALIE BETTENDORF, BYLINE: It's been something that I've been on since middle school. The problem is that there's this huge generation gap where young people are kind of understanding it intuitively while older people are just completely clueless.
So I actually went and talked to Seth Marceau. He's 18. He's one of my co-workers here at Youth Radio. And he says that immediacy is actually really important.
SETH MARCEAU, BYLINE: I think it's hard for older people to understand how to use Snapchat because it's so fast moving.
BETTENDORF: Despite what older people might think, studies show that young people actually are pretty engaged in the news. But we're just not getting it from traditional places. I know that I get most of my news from Snapchat and same with 21-year-old Noel Anaya.
NOEL ANAYA: The way they do their news is really straight-to-the-point, very quick, very brief. You get the main idea of a story. And it can be really juicy at times.
BETTENDORF: The thing about Snapchat is that it's immediate. It forces you to live in the moment on that one picture, that one video that you're watching because after it closes, it's gone forever.
GLINTON: All those things that Natalie described - how photos disappear and how engaged she and her colleagues are - have made Snapchat super valuable on Wall Street.
LANCE ULANOFF: They always talk about 18 - that's their core market. But I really think it pushes more to, like, 13- to 25-year-olds. That's really the heart of Snapchat's audience.
GLINTON: Lance Ulanoff is with the tech website Mashable.
ULANOFF: And there's good news and bad news in that. The good news is super desirable. But about half of that audience doesn't have its own money to spend, which is a bit of an alarm bell for advertisers who want to advertise things and then have these people turn around and buy that stuff.
GLINTON: Snapchat has gone public sooner in its evolution than Facebook or Twitter. And what makes it popular is that it is ephemeral, and that's long been a drawback and an advantage since the company's origins. Again, Lance Ulanoff...
ULANOFF: Yeah (laughter), it's - you know, like with superheroes, they like to do the origin story. They might not want to do the Snapchat origin story because it would include all this sexting. You know, when Snapchat first came along, it was really thought of as a sexting app.
GLINTON: The app makes it easy to seamlessly advertise in ways that people just don't notice. The problem for snapchat, though, is making money. The company lost more than $500 million last year even though now it's valued at more than $28 billion. Ulanoff says the challenge for Snapchat is not really making money but how to grow. He says it won't and can't stay a niche company for tweens and 20-somethings. It needs adults.
ULANOFF: And, of course the real challenge will be, as it does that and as it becomes successful as a content platform, to maintain contact with the younger users who got it there in the first place.
GLINTON: Yeah, it's like, Nathalie's having fun on Snapchat, but will she stop having fun if I'm there and the rest of America is?
ULANOFF: That is a real question. It was a question with Facebook as well - as parents started flooding into Facebook and teens started pulling back. Snapchat is a much smaller platform, faces much tougher odds, especially on the competition side.
GLINTON: For my Youth Radio colleague Natalie Bettendorf who had run to class, I'm Sonari Glinton, NPR News. Transcript provided by NPR, Copyright NPR.