In 2016 Snapchat’s parent company Snap Inc reported a lost of $514million. In that year it also released a mandatory public report, before it could IPO on the stock market. In the report the company said it “may never achieve or maintain profitability. For all of our history we have experienced net losses and negative cash flow. If our revenue does not grow at a greater rate than our expenses, we will not be able to achieve profitability.” And since then it still hasn’t.
The stock is 66% lower than what it debuted at 2 years ago, the company is losing key employees, and its top competition Facebook has taken its features. All of these things makes it extremely hard to understand why they turned down a $30billion buyout offer from Google in 2016.
Business is like poker, sometimes you have to know when to fold. If you stay in shark infested water for too long you’re bound to get devoured. This will either be one of the greatest comeback stories ever or one of the worse business decisions in history.
We covered Snap’s issues and Facebook’s bully tactics on Episode 5 of the @earnyourleisure podcast out now.
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