Twitter (TWTR) at one point was a $38 billion company back in December of 2013. Today, it is a $13 billion company plagued by lackluster revenue growth and a failure to monetize its platform and enormous user base. It could be that Snap Inc. (SNAP) is fearful of what has happened to Twitter over the past few years, and the company has decided to take action. Or perhaps it is because SNAP realizes its window of opportunity is closing with Facebook (FB) chasing it down in a marathon.

Whatever the case, SNAP is getting aggressive with its advertising and getting revenue moving in the right direction. According to Digiday, SNAP is reportedly offering ad buyers discount coupons and incentive to help get ad revenue up. The report notes that these offers started in the middle of May and are expected to run through mid-June, as the second quarter comes to a close. According to the article, SNAP is giving a discount of about 10 percent. Certainly, these are not huge discounts, but perhaps it is an attempt to get people sitting on the fence about advertising on SNAP to take the plunge?

The market did not react kindly to SNAP's last quarterly result, which saw its valuation fall from around $27.5 billion to about $21 billion, in one day. At its peak on March 3rd, the company was valued at $31.50 billion, today May 25th, it is $25 billion. 

SNAP Market Cap Chart

SNAP Market Cap data by YCharts

In all fairness, FB had a similar problem when it first went public, when it saw its market cap fall from around $82 billion to nearly $38 billion from May 2012 until August 2012. There had been fears at the time about how Facebook would monetize its platform. FB has seemingly solved that problem. 

FB Market Cap Chart

FB Market Cap data by YCharts

Twitter, on the other hand, has its problems trying to copy FB's success, with TWTR's market cap unable to regain the height seen so long ago. 

TWTR Market Cap Chart

TWTR Market Cap data by YCharts

When looking at the Twitter revenue growth above, it appears to have perhaps peaked versus FB's exponential revenue growth curve. 

The question is which road will SNAP travel down? Will SNAP resemble FB or Twitter more? Or will it go the way of MySpace? Unfortunately, that is how variable the directions for SNAP could go; it could be extreme for SNAP. 

It would seem for now that SNAP is trying to jumpstart revenue with a short promotional period. It will be interesting to see if this promotion gets the desired results. We will find out sometime in late July or early August. 

Michael Kramer is the Founder and Portfolio Manager of Mott Capital Management, LLC a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

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