MORE EARNINGS CALL PAIN FOR SNAP: Yesterday Snap, Inc. reported a pretty big miss on all key metrics in its Q2 Earnings Call. Digiday has a concise summary of their results in the attached link. While they’re technically still in “growth mode”, Snapchat’s Daily Active Users growth is flattening to just +7% over Q1. Since inventory is created through user interaction, if usage drops so do the number of ad units needed to drive topline revenue growth. As expected Wall Street reacted negatively to the news with the stock dropping 12% after hours. Once you get past all the minutia of the Street’s forecast vs. results, Snap’s issue really comes down to one thing . . . they have not found a way to counterpunch against Facebook’s Instagram Stories, which was a direct clone attack against Snapchat’s most popular product feature. Snap’s problems can best be explained in the following Tweet. Until they figure this one out I’d expect the pain to continue.
FACEBOOK GOES ALL IN ON VIDEO: Speaking of Facebook, up until now video on has been ancillary on the platform, with product features like a Video Tab and Facebook Live getting relatively little traction. But that’s about the change when FB launches its new Watch platform. Watch will include long form episodic videos, original content from over 30 producers, and even some live MLB games. By upping the ante on hubbed video content FB is hoping to better compete with Google’s YouTube and even try to outflank OTTs like Netlfix and Amazon. When you combine this development with Wednesday’s announcement from Disney that it’s pulling content from Netlfix in 2019, you get the impressions that a video battle royale is about to break out among the tech giants. Makes you wonder what shape NBC, CBS, ABC and Fox are going to be in after this all shakes out. My guess is they’ll have much lower ratings thanks to many new tech buddies in their video sandbox.
SOUNDCLOUD’S JUDGEMENT DAY: Finally this week, we may be nearing the conclusion of the long, sad saga of SoundCloud. According to RAIN a pair of investment groups from Singapore is offering SoundCloud a cash lifeline of $170M in return for majority ownership in the streamer. SoundClound CEO Alexander Ljung has reportedly told investors that if this deal isn’t accepted by today they may not be able ”to continue as a going concern.” This sets up a Sword of Damocles moment for investors who much choose between giving up over half of their equity for a relatively small amount of cash, or reject the offer and face probable bankruptcy. I’m just wondering what SoundCloud would do with a fresh $170M to turn their business around? Obviously they’re bleeding money no matter what. So if they agree to this latest cash infusion are they just pushing off their inevitable demise?
Have a great Friday (and weekend) guys!
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