Snapchat needs a sugar daddy. Its cash reserves dwindling from giant quarterly losses. Poor morale from a battered share price and cost-cutting measures sap momentum. And intense competition from Facebook is preventing rapid growth. With just $1.4 billion in assets remaining at the end of a brutal Q3 2018 and analysts estimating it will lose $1.5 billion in 2019 alone, Snapchat could run out of money well before it’s projected to break even in 2020 or 2021.
So what are Snap’s options?
A long and lonely road
Snap’s big hope is to show a business turnaround story like Twitter, which saw its stock jump 14 percent this week despite losing monthly active users by deepening daily user engagement and producing profits. But without some change that massively increases daily time spent while reducing costs, it could take years for Snap to reach profitability. The company has already laid off 120 employees in March, or 7 percent of its workforce. And 40 percent of the remaining 3,000 employees plan to leave — up 11 percentage points from Q1 2018 according to internal survey data attained by Cheddar’s Alex Heath.
Snapchat is relying on the Project Mushroom engineering overhaul of its Android app to speed up performance,