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Did Rihanna End Snap?

Apr. 02, 2018 12:41 PM ETSnap Inc. (SNAP)META, TWTR30 Comments
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Shock Exchange


  • Snap and Rihanna had a tete-a-tete over an ad making light of domestic violence.
  • Racy ads likely connotes Snap's desperate need to amplify user engagement to grow revenue.
  • The Rihanna tete-a-tete may not crush Snap, but consistent operating losses and cash burn could.
  • Sell Snap.

Pop stars Chris Brown and Rihanna. Source: stylecaster

A few weeks ago, pop star Rihanna and Snapchat (NYSE:SNAP) made major headlines. Snapchat ran an advertisement for a game called "Would you rather." The game poses tough questions to its participants. The choices the Snapchat ad gave were "Slap Rihanna" or "Punch Chris Brown." Brown pleaded guilty in 2009 to assaulting Rihanna during an argument when they were dating.

Rihanna criticized Snapchat on social media for animating something that would intentionally bring shame to domestic violence victims, and making "a joke of it."

Snapchat removed the ad from its platform and also admitted the advertisement was approved in error:

"The advert was reviewed and approved in error, as it violates our advertising guidelines. We immediately removed the ad last weekend, once we became aware. We are sorry that this happened."

Snap's share price fell by over 5% after Rihanna's criticism went public, wiping out over $800 million of its market value. The criticism has been a public relations nightmare for the company. Rihanna has millions of fans, and I would wager that many of them are avid users of social media, including Snapchat. Secondly, amid the "Me Too" movement women are fighting back against violence and harassment. This is the wrong time to make light of it. That said, the Rihanna tete-a-tete is just one of many of Snapchat's problems.

Snapchat Is Hemorrhaging Cash

When I first heard about Snapchat's exploding videos a few years ago, I thought it was a neat idea. It could save teens the embarrassment of having their videos seen by people other than who they were intended for. Just because something is a neat idea does not necessarily mean it should be a publicly-traded company. Snapchat went public a year ago. Its revenue has grown, but like most start-ups, Snapchat is hemorrhaging cash.

This article was written by

Shock Exchange profile picture
The Shock Exchange has a B.A. in economics and MBA from a top 10 business school. He has over 10 years of M&A / corporate finance experience. Currently head the New York Shock Exchange, financial literacy program based in Brooklyn, NY.His book, "Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead", predicted pain ahead for the U.S. economy and financial markets.In 2014 the law firm of Kirby, McInerney, LLP brought a class action lawsuit against Molycorp, Inc. for "materially misleading statements" in its financial statements. Kirby, McInerney used investigative journalism from the Shock Exchange to buttress its case. That's the discipline the Shock Exchange brings to every situation he covers for SA.

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