How Much Is Snapchat Worth?

Snapchat is a multimedia messaging app owned by Snap Inc. The app has seen its fair share of challenges in recent years — including a Federal Trade Commission charge that Snapchat misled users about its noted feature that photos and videos disappear “forever” once sent — but it is still one of the most popular social media apps among young people, averaging 306 million daily users who spend an average of more than 30 minutes per day on the app.

Review the figures below to learn more about the company’s market value and find out if it’s a smart investment for you.

Snapchat’s Market Cap: $88.764B

When investors want to know the size of the company, they look at market capitalization, or the total dollar worth of the company’s stock. To find this number, they multiply the number of outstanding shares by the current market price of one share. Snapchat’s market cap stands at $88.764 billion.

Market cap is just one figure investors use to get a general idea of how Snapchat stock should be priced. The fact that the company has been losing money for the last three years might be of concern.

Snapchat’s Net Worth: -$2.16B

Although market cap gives you a sense of what the market values a company at, the number can be based on hundreds of factors, big and small, that boil down to market volatility. The GOBankingRates Evaluation of a company’s net worth, however, considers figures like assets and revenue, using a company’s income statements for the last three fiscal years to draw a conclusion of its value.

Based on Snapchat’s revenue and profits from the last three years, Snapchat has a negative valuation of minus $2.16 billion.

Snap Faces User Experience Challenges

Snap Inc. went public in March 2017, raising $3.4 billion for its initial public offering. Its main products are Snapchat, the messaging app, and Spectacles, which manufactures eyewear that doubles as cameras.

Although the company got off to a strong start with its IPO, its ability to generate profit has been less than reliable. The company has been losing money for years due to operating costs, legal expenses and lackluster user growth.

As far as market forces go, Snapchat’s user experience has, in the past, incurred the wrath of celebrities like Rihanna and Kylie Jenner. Jenner’s Snapchat diss in February 2018, for example, led to the loss of $1 billion in market value for Snap Inc.

More recently, Snapchat, like other social apps, including TikTok, has been under pressure to take more proactive steps to stem the use of its platform for illicit drug sales and to protect minor users against exploitation by adult predators. In response, Snapchat announced in October that it will roll out new “family center” features, yet to be named, designed to “give parents more visibility into who their teenage users may be talking to on Snapchat and their privacy settings, among other things,” TechCrunch reported.

Snapchat says it reaches 75% of millennials and Gen Z. According to a survey by Piper Sandler, it’s the most popular social media platform among teens.

What’s Ahead for Snapchat

Snapchat shares dropped sharply after the company’s third quarter 2021 earnings release. Although revenue was up 57% over the same period last year, that figure fell $3 million short of Snapchat’s guidance. CEO Evan Spiegel placed part of the blame on changes Apple made to mobile user privacy settings, which disrupted mobile advertising when the changes rolled out with an iOS update.

Other factors affecting Snapchat’s advertising revenue include the impact of ongoing supply chain issues and labor shortages on the businesses that advertise on the platform. Snapchat said in its earnings release that it expects lower advertising demand to continue into the fourth quarter.

On the upside, Snapchat is teaming up with Samsung Electronics, which has 70% of South Korea’s smartphone market share, to strengthen its presence in that country, The Korea Times reported. Snapchat is also hoping to attract content creators with new tools that would allow creators to generate revenue from their work.

Snapchat’s CEO

Snapchat CEO Evan Spiegel received $2,094,432 in total compensation in 2020. Like other tech execs, he receives a salary of just $1 a year. The remainder is paid as other forms of compensation, such as pension — but not equity. Despite taking a roughly $800 million hit when Snapchat’s stock plummeted following the Q3 earnings release, Spiegel’s net worth has more than tripled since 2017 to its current $10.4 billion, according to Forbes’ estimate.

Daria Uhlig contributed to the reporting for this article.

Methodology: The GOBankingRates Evaluation assesses a company’s net worth based on the company’s total assets, total liabilities, and revenue and net income from the last three years. Base value is established by subtracting total liabilities from total assets from the company’s last full fiscal year. Income value is established by taking the average of the revenue from the last three full fiscal years, plus 10 times the average of the net profits from the last three full fiscal years, and then calculating the average of those two figures. The final GOBankingRates Evaluation number is the sum of the base value and the income value.

Data is accurate as of Oct. 25, 2021, and subject to change.

This article originally appeared on GOBankingRates.com: How Much Is Snapchat Worth?