Snap, the parent company of the popular Snapchat app, is still competing against more established social media platforms in a number of different areas. Number of users, user engagement time, ad revenue, and technological innovation are the primary measuring sticks against Facebook and Instagram.
Unfortunately, Snap investors are finding that the company lags behind its competitors in most of these categories. The unique features that enabled Snapchat's initial popularity have been mimicked and distributed throughout other platforms with much larger user bases.
At this point, Snapchat's only distinct advantage is the high amount of time its users spend on the app versus Instagram and Facebook. With that advantage, one could argue that Snap is primarily a data company rather than a tech, media, or entertainment company. Snapchat has an opportunity to gather and leverage a higher quality of data from its users, even if it can't compete in sheer user quantity. That in-depth customer information will enable the company to further leverage targeted ad revenue, or become a target of acquisition by a larger firm that values the data. It should be no surprise that information giant, Google, might be interested in buying Snap. Snap may consider leveraging their data quality advantage soon, especially since that advantage isn't guaranteed to continue, and their expenditures are significantly outpacing their revenue.
Snap will report its second-quarter earnings Aug. 10, and after a turbulent first few months as a public company, it will need to show investors and advertisers that it deserves to be in the same conversations as Facebook and Google.