Snap Inc., the parent company of the Snapchat app, hit the public market today.
Interested investors who have never used the Snapchat app might vaguely think of Snapchat as a “social media” platform. Millennials (and others) who do use the app, and know that the term “social media” has become somewhat meaningless, likely think of Snapchat more as a messaging service, or broadly speaking, a media platform (with news and entertainment content, presented visually). Most users almost certainly don’t think of it as a camera product.
But that’s what Snap is calling itself.
In its original S-1 filing with the SEC one month ago, Snap included a big, bold graphic that declares in no uncertain terms: “Snap Inc. is a camera company.”
That may be a problem for potential investors.
Yes, Snapchat, the “flagship” product of Snap (in the company’s own words), relies on your smartphone’s camera, but is not, technically speaking, a camera of its own. Instagram also functions through your phone’s camera, but people do not call Instagram a camera company.
Snapchat does make Spectacles, which are sunglasses that can snap photo and video. In November, the company put them out in a limited release, but this month it made them more widely available (for $130), a clear step to help justify the “camera company” label. There are also reports that Snap is working on a drone product that would pair with the Spectacles.
It would appear Snap is hustling to emphasize hardware.
But why would a young, sexy tech company want to put itself in the camera business? GoPro, an actual camera company, has had disastrous performance on the public market, down 74% since it debuted in June 2014.
Piper Jaffray analyst Gene Munster, in a new note, suggests investors will be confused about the “camera company” identity.
“We believe investors will have questions over the next year as to what being a ‘camera company’ means,” he writes. “Philosophically, we think of it as Snap trying to own the tech stack one step above social… By trying to own, or at least influence, the camera layer itself, Snap evolves beyond a social media app into an enabler of communications. In that sense, Snap’s focus on the camera is not all that dissimilar from Facebook with its experiments with VR and AR. The difference is Snap appears to be all in.”
In other words, it’s more likely that Snap is using the label of “camera company” simply as a differentiator from its peer social platforms: Twitter, Facebook, and Facebook-owned Instagram. For reference, Twitter, at the time of its IPO, called itself “a global platform for public self-expression and conversation in real time.” Facebook, at the time of its IPO, did not label itself, but identified its mission: “Our mission is to make the world more open and connected.”
Snap’s attempt to differentiate may bite it, because now the company must live up to its surprising label.
More accurately, Snap is a media company. Its platform packages and summarizes news, presents original videos, and allows people to chronicle their days in a series of photos and videos. But it wouldn’t want to call itself that, just like Facebook avoids that identity.
But the most accurate label of all for Snap may be simply: a chat company.
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Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.
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