Snap CEO Evan Spiegel Jabs Rivals, Anticipates Major Ad Revenue Gains At First Investor Day For Wall Street Darling

Jill Goldsmith
·4 min read

Snap’s grown up– it must be, the Snapchat parent had its first Investor Day today – and executives were upbeat that the nearly ten-year old social media platform beloved by Gen Z will see revenue grow by 50% or more for the next few years.

Co-founder and CEO Evan Spiegel kicked off the three-hour virtual event with a roundabout dig at larger rivals and set the table for a deep dive into the Venice, California company’s core products led by Stories – the oldest business and biggest sales driver – Camera, Snap Map, Chat and Spotlight. Spiegel is enamored with augmented reality (AR), increasingly popular with Snapchat’s users and advertisers but, he said, a decade away from hitting its stride.

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“AR is the next major shift in computing and we are committed to leading the way,” he said. With the phone “we are still constrained by the four sides of a small screen” but “a new era of self-expression” is coming.

An accomplishment Spiegel noted is how much better the fast growing firm has become at making products that are hard for others to rip off.

“Stories showed us that other companies could take our innovations and copy them. It fundamentally reshaped how we think about our business … [and drove] our new innovations into scaled platforms that we believe are more defensible. They bring more value and are more difficult to replicate,” he said.

Stories, from 2013, is snaps strung together in a narrative. Facebook launched Instagram Stories and also tried to buy Snap that year for $3 billion. The Mark Zuckerberg-led giant is said to have reached out again in 2016 before Snap went public in 2017 at $17 a share, reaching a public valuation of $24 billion. Its market cap hit $100 billion for the first time, briefly, yesterday.

The shares, which rose 11% Tuesday to over $70, have soared over the past year from a 52-week low of under $8. Wall Street seems to like the story of the young-skewing, internationally expanding platform that sees itself as a kinder, gentler social media presence and has in fact largely skirted the controversies dogging Facebook, Twitter, Google and YouTube from privacy to hate speech to misinformation. Spiegel has not been hauled in to testify before Congress recently.

Jacob Andreou, VP, Product, described what Snapchat is not – a “relentlessly data-driven culture like we’ve seen in our peer companies, many of which are primarily focused on driving behavior.” Snap, he said, is focused on “product value, not behavior.”

Snapchat has 265 million daily active users (up 22% in the four quarter year-on-year). It reaches over 70% of 13 to 24 year-olds in countries comprising over half the world’s digital ad spend. About 80% of its reach is above the age of 18. Chief business officer Jeremi Gorman stressed the potential of Snapchat, which comprises less than 2% of the U.S. digital ad market but reaches nearly half of U.S. smartphone users.

The Snap Map feature, which lets users see where their friends are, is rapidly adding small businesses and execs see it as a multi-billion dollar platform over time. Spotlight, a curated offering of the best Snaps that launched last year is seeing 175,000 submissions a day and had over 100 million monthly active users in January.

The presentation didn’t dwell on programming but noted that in the second half of last year over 85% of the U.S. Gen Z population watched at least one Snap Original, shows made exclusively for Snapchat, like Will Smith’s talk show Will From Home (43 million total viewers). NBC and Buzzfeed are also content partners.

Snap’s demo is hard to reach on traditional television, Gorman noted. Big investments in its ad tech platform have caught Snapchat up with other players.

One of the biggest hurdles is educating advertises, who have heard of Snapchat but often have no idea what’s on it – even though their kids might. “We are selling to an audience that doesn’t see Snapchat on a day-to-day basis. They don’t use it,” she said. “It’s a heavy lift.”

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