Snapchat Inc., the ephemeral messaging app, is setting goal to generate between $300 million and $350 million in revenue in 2016. The projection appears at least three times of the $100 million revenue, the company has recorded during October and six times than the original target of $50 million for 2015.
Founded four years back, Snapchat business is new, still evolving and advertiser interest is also experimental. Since most advertisers don't use the app for their stable advertising plans, so prediction on incoming revenue with much accuracy must be very tough, comments Re/code.
The revenue projection indicates that the social networking tool of choice for the millennial generation is transforming its popularity into a real business. Snapchat has developed various advertising offerings on its mobile app. These include ads that appear alongside its Live Stories as well as sponsored lenses that users of the service can gussy up their photos with, reports Business Insider.
Snapchat generates revenue through several means. Discover, the media hub has been introduced into the app a year ago allowing users consuming bite sized content from publishers and advertisers. This appears as the main source for revenue earning, according to a report published in Fortune. The messaging app provider has recorded $100 million revenue during fourth quarter of the last year. Advertising is cyclical and fourth quarter appears as the peak season for strong advertising. But the revenue figure appears worth mentioning since the run rate metric provides a glimpse of business growth. Higher revenue projection indicates that the business is growing at smooth rate. If $16 billion valuation of the business is compared with this year's revenue projection, the ratio becomes 50 times. This may be compared with the case of Facebook where this ratio stands at 17 times. Apart from smooth business rolling of Snapchat, the advertising API (a software tool for connecting services) is also believed to contribute for such higher revenue projections. This feature allows advertisers to inject their ads into Snapchat more easily. 2016 election has also appeared as a boon for Snapchat in terms of revenue earning. Bernie Sanders has reportedly run a nine-day campaign before the Iowa caucuses. Ted Cruz has also used Snapchat to troll fellow Republican candidate Donald Trump. The app developer has hired a political ad sales person for procuring such businesses in 2015. The company has procured new funding of $175 million from Fidelity last week against its declared value of $16 billion. However, a Snapchat spokesperson has declined to make comment on the company financials.
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