SNAP - Snap Has a Brand New $300 Million Annual Business and It's Already Grown 40% Since September
2023-12-24 08:24:00 ET
It may describe itself simply as a technology company, but the primary moneymaker for Snap (NYSE: SNAP) is its popular Snapchat app. And with 750 million people using Snapchat every month around the world, it's fair to say the app is a huge success.
Snap generates revenue from this enormous Snapchat user base by displaying ads. Of its 750 million monthly users, over 400 million use it every day, on average. And its user base is heavily concentrated in younger-age demographics. Management believes this is a desirable target audience for advertisers, which is why it believes it can grow ad revenue long term.
There's been a problem, however, with this plan lately. While Snap's user base and ad impressions are up, its ad revenue is struggling. In the third quarter of 2023, the company's effective cost per thousand impressions (eCPM) -- a measure of ad rates -- was down 5% year over year.
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Snap Has a Brand New $300 Million Annual Business, and It's Already Grown 40% Since September