Q&A with business teacher Andrew Lange.

Do you think Snapchat could become a profitable company?

“Well that’s a challenge because I was reading today and to create an ad [advertisement] on Snapchat is very expensive because you have to shoot a video and the form of the video is different. It is much more expensive than a Facebook post or a tweet. So it is more expensive for companies to do that and they are currently substantially not profitable; they lost around half a billion dollars last year. When a company does an IPO (initial public offering), they go around and do this thing called a road show trying to generate interest in the stock. It is sales job; they want people to buy their stock. I read on CNBC about CFO (chief financial officer), “But in its regulatory filing announcing its intention to go public weeks ago, the company revealed a net loss of $514.64 million in 2016, wider than $372.89 million in 2015, and warned it ‘may never achieve or maintain profitability.'”

How do you think young leadership will affect Snapchat?

“I do not know anything about their CFO but I do remember when Facebook went public, they brought in Sheryl Sandberg as an executive with a lot of experience to help them through some of these things, whether or not Snapchat needs to do that. I cannot image you can be the CFO without a lot of accounting background. It would be a good idea if they were struggling with revenue.”

What are Snapchat’s options for the future after becoming public?

“They kind of have two roads in front of them. They could try to scale like Facebook. I am under the impression they have a lot of users but not everybody like Facebook does. So they could try and go for being this big company or they could do more of a premium service. I don’t know if that means people would be paying for it or not but that would be their other option for generating more revenue. Based on what I was reading it did not seem like they knew what they were going to do and that seemed to be a red flag too. They don’t have a plan on how to take that 500 million dollar loss and turn it profitable was my interpretation of it.”

Would you invest in Snapchat?

“I wouldn’t buy it right now. Is it a guarantee that it will go down? I don’t know but earnings reports they will have to do them every quarter now that they are public. So that will be the thing to watch, how do earnings do, that is the number one thing people look for.”