Skepticism over Snapchat

How can a money-losing app be worth tens of billions of dollars?

Skepticism over Snap
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How could a money-losing app be worth tens of billions of dollars? asked James Stewart at The New York Times. Stock in Snapchat's parent company, Snap Inc., closed 44 percent up on its first day of trading on Wall Street last week and rose another 20 percent the next day. Snap was briefly worth more than $40 billion — more than CBS, Delta, or Allstate. Those are eye-popping numbers for an app that lets you "send nude photos of yourself that self-destruct" and offers camera filters that "turn your head into a taco." But it's even more remarkable considering the company has lost money every year since it was founded in 2011, including $514.6 million in 2016, and has explicitly warned investors "it may never earn a profit." Snap shares have fallen back to Earth a bit since last week, said Nina Agrawal at the Los Angeles Times. But despite investors' growing doubts, the company's stock is still trading "well above what several Wall Street analysts believe Snap shares are worth."

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