A Look At Snap’s Recent Acquisitions

Snap (NYSE:SNAP) has had a relatively rocky few months since its March IPO, with its Q1’17 user growth coming in below expectations and its stock witnessing significant volatility amid Facebook’s moves to quickly copy its best features (related: Can Snap Move Beyond Being Facebook’s Innovation Lab?). That said, Snap hasn’t been sitting still. The company has been rolling out new features, tweaking its advertising strategy while also making niche, technology-focused acquisitions as it looks to deploy some of the funds it raised from its public offering. Below we take a look at two of the company’s most recent acquisitions – Placed and Zenly.

Trefis has a $17 price estimate for Snap, which is in line with the current market price.

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Placed Acquisition Could Help Snap Justify Ad Pricing, Improve Transparency 

Earlier this month, Snap confirmed that it had acquired Placed, a startup that helps to track the offline success of digital ad campaigns, in a deal that could be valued at upwards of $200 million, including stock grants. Placed’s technology essentially helps marketers figure out whether their digital ads are resulting in more footfall to their stores. The acquisition is likely to complement Snapchat’s “Snap To Store” tool, which tracks whether friends who viewed a sponsored geofilter subsequently visited any of the marketers locations. Tools such as these are becoming important for Snap, as it looks to demonstrate the efficacy of its advertisements, which are reportedly more expensive that its peers. Overall, the deal could help the company improve its average revenue per user at a time when its user growth appears to be slowing down (the company added just ~3 million new users in Q1’17, compared to an average of ~5 million users in the prior three quarters)

Zenly Deal Powers Snap Maps, Could Boost Engagement

In late May, Snap acquired Zenly, a startup that creates social maps that allow users to see where their friends are located, for $200 million in cash plus additional stock awards. Snap has already deployed the technology in its Snapchat application under a feature called Snap Maps (available currently on iPhone) that allows users to view Snaps based on real time location. The feature uses Bitmoji – which are animated cartoon avatars that Snap acquired last year – as markers on the map. The tool could potentially boost engagement on Snapchat, continuing the company’s move of crowd sourcing user posts for live events such as sports and concerts. A few months ago, Snap added a new search feature to display more location-based stories. Snap reported a slight improvement in engagement in Q1, with users spending over 30 minutes on its app, compared to the 25 to 30 minutes it highlighted on its Form S-1.

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