INSUBCONTINENT EXCLUSIVE:
Snap Inc got a fresh infusion of cash from the Saudi royal family to help it survive despite losing $353 million this quarter
Prince Al-Waleed Talal tweeted a video of him and Snap CEO Evan Spiegel, noting that he invested $250 million in exchange for a 2.3 percent
The investment raises questions about what say the Saudis will have in Snapchat direction.
The investment comes at a $10.8 billion valuation
— a steep discount to Snap $17 billion market cap
That indicates the company may have been eager to squirrel away cash as losses deplete its cash
reserves.
#1573;ستثمرت ٩٥٠ مليون
ريال سعودي لاتمام صفقة
شراء حصة بنسبة ٢,٣٪ في
شركة سناب شاتhttps://t.co/XXOgEvEB2W
I invested $250 Million to acquire
2.3% stake in @Snapchat companyhttps://t.co/bdAMGVw3DI pic.twitter.com/jBIiAfqy7t
mdash; الوليد
بن طلال (@Alwaleed_Talal) August 7, 2018
Snap declined to comment on the news
But after an initial 11 percent pop after earnings was announced, Snap shares sank to just below the closing price as the user shrinkage and
Saudi investment sank in.
Al-Waleed Talal has previously buddied up to the United States tech sector, investing in Lyft and Twitter
Elsewhere, he recently made investments in European streaming music service Deezer, as well as Chinese ecommerce giant JD.com
He previously owned shared of Newscorp and Citigroup.
The prince had sat down with Snapchat CEO Evan Spiegel and COO Imran Khan back in
2015 to discuss a possible investment, but nothing came of it until now
The Arabic press release explains that the deal was done on May 25th
&Our investment in Snapchat is an extension of our strategy for personal investment in new technology through leading companies such as
Lyft, JD.com, and social networking sites, Twitter& the release explains.Snapchat is one of the most innovative social networking platforms
in the world and we believe it is just beginning to surpass its true potential.
Snap could be looking for more allies abroad as it seen weak
international growth after years of neglecting the developing world and its Android app performance
While the Rest Of World region is typically a source of growth for social networks, Snap actually shrank by 1 million daily active users
The one truly bright point of its earnings report was a 65 percent quarter-over-quarter boost in average revenue per user in the Rest Of
The Saudi royal family involvement could potentially pave the way for partnerships or growth opportunities in the Middle East at a time when
Snap needs whatever help it can get.
The extra cash will extend Snapchat runway and give it more time to stabilize its business
With its daily user count now shrinking, it will have to find creative ways to squeeze more cash out of those that remain to keep revenue
That may take time, and Saudi Arabia just gave it more.
Snapchat shrinks by 3M users to 188M despite Q2 earnings beat
