Snap Adds Millions of New Users, Shares Sink Despite Revenue Gains

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

Snap Adds Millions of New Users, Shares Sink Despite Revenue Gains

Snap added millions of new users last quarter — its largest increase in years — beating Wall Street expectations of growth and revenue.

Riding a wave of increased digital ad-spending and the pandemic's ongoing limitation of leisure activities, Snap added 16 million users and pulled in $911 million in revenue in the fourth quarter of 2020.

Despite the growth, share prices plummeted as much as 11% in after-hours trading on a lower-than-expected profit forecast for the first quarter of 2021. Analysts had expected a first-quarter profit projection of around $19 million, but Snap reported an anticipated EBITDA loss of between $50 million and $70 million.

Explaining the underwhelming forecast, Snap Chief Financial Officer Derek Anderson pointed to temporary advertising pauses in the first two weeks of January following the U.S. Capitol riot and uncertainty stemming from Apple's upcoming iOS privacy rule-changes, which are slated to take effect late in the first quarter and could depress ad spending. But, he pointed out that the number of advertisers on Snapchat doubled in the fourth quarter over the previous year and that a continuation of recent momentum could change the first-quarter outlook.

Over 90% of the U.S. Gen Z population watched Snap's curated content in the fourth quarter, the company said, and more than 200 million users engage with Snap's AR every day on average.

Snap's global daily active users climbed to 265 million, its largest increase since the second quarter of 2016. That beat consensus Wall Street expectations by about 7 million. Overall revenues of $911 million also beat analyst forecasts of around $856 million.

Meanwhile, the company made $3.44 per user globally, which lags competitor Facebook by nearly $7. That gap has given analysts reason to believe that Snap has plenty of room to further monetize its user base.

Snap has said it offers advertisers innovative opportunities to reach a coveted younger demographic via its AR "lens" technology and Discovery content platform. The company has recently partnered with brands like Gucci and Champs Sports to enable "virtual try-ons" as retailers increasingly look to tech to adapt to the post-pandemic world.

"We've seen a lot of acceleration in demand for AR advertising and it's a trend we don't see going backwards," said Chief Business Officer Jeremi Gorman, pointing to Snap's plans to invest "heavily" in making it easier for advertisers to build lenses via Snap's lens studio.

In addition to AR and content, Snap has also been ramping up its gaming division, which could provide further revenue expansion through both advertising and in-app purchases. It continues to look to its Maps feature as a future moneymaker as well. Noting that they are used by 200 million users, CEO Evan Spiegel said Maps offers a "substantial revenue opportunity" from small- and medium-sized local businesses, particularly once the pandemic subsides.

Entering Thursday, Snap's share price had climbed 260% over the previous year.

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Genies Wants To Help Creators Build ‘Avatar Ecosystems’

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Genies Wants To Help Creators Build ‘Avatar Ecosystems’

When avatar startup Genies raised $150 million in April, the company released an unusual message to the public: “Farewell.”

The Marina del Rey-based unicorn, which makes cartoon-like avatars for celebrities and aims to “build an avatar for every single person on Earth,” didn’t go under. Rather, Genies announced it would stay quiet for a while to focus on building avatar-creation products.

Genies representatives told dot.LA that the firm is now seeking more creators to try its creation tools for 3D avatars, digital fashion items and virtual experiences. On Thursday, the startup launched a three-week program called DIY Collective, which will mentor and financially support up-and-coming creatives.

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Here's What To Expect At LA Tech Week

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Here's What To Expect At LA Tech Week

LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.

The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.

From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.

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PCH Driven: Director Jason Wise Talks Wine, Documentaries, and His New Indie Streaming Service SOMMTV

Jamie Williams
­Jamie Williams is the host of the “PCH Driven” podcast, a show about Southern California entrepreneurs, innovators and its driven leaders on their road to success. The series celebrates and reveals the wonders of the human spirit and explores the motivations behind what drives us.
Jason Wise holding wine glass
Image courtesy of Jason Wise

Jason Wise may still consider himself a little kid, but the 33-year-old filmmaker is building an IMDB page that rivals colleagues twice his age.

As the director behind SOMM, SOMM2, SOMM3, and the upcoming SOMM4, Wise has made a career producing award-winning documentary films that peer deep into the wine industry in Southern California and around the world.

On this episode of the PCH Driven podcast, he talks about life growing up in Cleveland as a horrible student, filmmaking, Los Angeles and his latest entrepreneurial endeavor: A streaming service called SOMMTV that features–what else?–documentaries about wine.

The conversation covers some serious ground, but the themes of wine and film work to anchor the discussion, and Wise dispenses bits of sage filmmaking advice.

“With a documentary you can just start filming right now,” he says. “That’s how SOMM came about. I got tossed into that world during the frustration of trying to make a different film, and I just started filming it, because no one could stop me because I was paying for it myself. That’s the thing with docs,” or “The good thing about SOMM is that you can explain it in one sentence: ‘The hardest test in the world is about wine, and you’ve never heard about it.’”

…Or at least maybe you hadn’t before he made his first film. Now with three SOMM documentaries under his belt, Wise is nearing completion of “SOMM4: Cup of Salvation,” which examines the history of wine’s relationship with religion. Wise says it’s “a wild film,” that spans multiple countries, the Vatican and even an active warzone. As he puts it, the idea is to show that “wine is about every subject,” rather than “every subject is about wine.”

For Wise, the transition to launching his own streaming service came out of his frustration with existing platforms holding too much power over the value of the content he produces.

“Do we want Netflix to tell us what our projects are worth or do we want the audience to do that?” he asks.

But unlike giants in the space, SOMMTV has adopted a gradual approach of just adding small bits of content as they develop. Without the need to license 500 or 1,000 hours of programming, Wise has been able to basically bootstrap SOMMTV and provide short form content and other more experimental offerings that typically get passed over by the Hulus and Disneys of the world.

So far, he says, the experiment is working, and now Wise is looking to raise some serious capital to keep up with the voracious appetites of his subscribers.

“Send those VCs my way,” Wise jokes.

Subscribe to PCH Driven on Apple, Stitcher, Spotify, iHeart, Google or wherever you get your podcasts.

dot.LA reporter David Shultz contributed to this report.