Snap Inc., the firm that owns the hugely popular social media app Snapchat, had coughed up 213 million US dollars for its acquisition of the social maps app Zenly, as duly stated in its 10-Q SEC (Securities Exchange Commission) filings document.
Snap’s stock took a beating post its announcement that its earnings for Quarter 1 and Quarter 2 were below expectations as well as its dismal growth in its user base. The stock closed approximately fourteen percent down at 11.83 USD a share (1.94 USD down from the day's opening).
Snap had, in June this year, launched the location sharing feature on its app Snapchat called Snapmap. This had led many to comment on its similarities with the Zenly Social map (a social media application based out of France).
Some of its users had even gone to the extent to state that Snap had blatantly copied Zenly’s platform on its own Snapchat platform.
What these regulatory filings prove is that Snap had not blatantly ripped off Zenly's platform. Rather, it had instead shelled out a whopping 213 million USD for Zenly's team. Yes, that's right, Snap just acquired the Zenly team to develop a similar set of features for Snapchat and agreed that the Zenly app operate independently.
The Zenly Social maps, as well as Snapchat’s Snapmap both offer the same functionality as of now, i.e., allowing the user to keep track of his/her friends' movements and locations across the globe.
The filings with market regulator SEC also state that Snap had paid 135.2 million USD for the acquisition of an advertising measurement services company. The same filing also reveals that Snap had also paid 62.1 million USD for the acquisition of a part of a social advertising software company and also a startup that operates a cloud based platform for building content online.
Even Snap’s proprietary product, the Snap spectacle has managed to just get in 5.4 million USD in revenues in quarter 2, which is a thirty-five percent decrease in sales as compared to Quarter 1.
The Tough Road Ahead
Snap Inc. is currently taking a beating with not being able to meet investor and street expectations and its stock is going to witness volatility in the medium term unless Evan Spiegel and team pull their socks up and start innovating to launch better products and features that can be monetized easily.