Here's How Snapchat Spectacles Are Expected to Sell...

Evan Asano  |

Snapchat Spectacles has transformed Snap Inc.’s image as the millennial social media app of choice to an innovative camera company just in time for its coming IPO. In the face of Facebook’s (FB) launching Instagram Stories, a near identical replication of Snapchat Stories, Spectacles will serve to differentiate and promote Snap Inc.’s current value.

At $129, Spectacles are sunglasses equipped with a video camera that allows users to take “Snaps” (photo and video content) of the world without ever having to remove them from the user’s face. Once captured, these Snaps automatically upload to the user’s Snapchat social media channel. Certainly, the launch of Spectacles shows that Snap Inc. is committed to positioning itself as a “camera company”, and that Snap will only be more involved in producing hardware in the future.

Presently, Snapchat has an impressive user base of 150 million. However, according to current growth rates, its global user base is projected to reach 280 million monthly active users by 2020 (see Snapchat User Growth below). Snapchat’s audience is expected to grow even larger with widespread adoption as it implements new search and advertising features that will make the platform more accessible to social media users and marketers alike.

By comparing Spectacles to other popular wearables in the industry, we found that Spectacles is the next $5 billion tech product. First, we found the year 1-4 adoption rates of other hardware products that possessed an existing user base. For instance, the Apple Watch launched to existing iPhone or Apple (AAPL) product users. Our research showed that adoption rates of popular items ranged from 3%-18%, with Apple watches at a 3% adoption rate in year 2 and fitness trackers leading at 18% (see Adoption Rate Analysis). For the Snapchat Spectacles, we assumed a first year adoption rate of 1% to forecast future sales.

For Scenario 1, we forecasted a growth trajectory similar to the iPhone in its first four years and extrapolated for the Spectacles. Using a 1% adoption rate in 2017, we discovered that the projected revenue of Spectacles would sell reach 11 million units sold yielding $1.4 billion in gross revenue (see Projected Revenue for 2020—Market Penetration).

We also projected the potential gross revenue for Spectacles using adoption rates that were comparable to other tech products (see Projected Revenue for 2020—Sales). For example, Scenario 2 depicts the potential gross revenue of the Spectacles at a 5% adoption rate, which is a rate not too far off from the 6% adoption rate of the Amazon Echo (AMZN). Gross revenue for each scenario was determined based on each adoption rate. At a 5.00% adoption rate, the Spectacles would stand to gross $1.9 billion in revenue by selling 15 million units. Scenario 4 shows a 20% adoption rate of the Spectacles, meaning 58 million units sold with $7.5 billion in gross revenue.

Evan Asano is the CEO and founder of Mediakix, a leading influencer marketing company that works with top brands and social media influencers. Evan has been published in Forbes, Inc., and Fortune. In his spare time, Evan enjoys surfing, photography, scuba diving, and traveling.

Since 2011, Mediakix has worked with the largest and fastest-growing brands on influencer marketing campaigns across YouTube, Facebook, Instagram, Snapchat, and top lifestyle blogs. Mediakix draws upon its social media influencer network of thousands and years of campaign performance data to develop customized, ROI-driven campaigns that meet and exceed its clients’ marketing and business objectives. From initial strategy to campaign execution and analysis, Mediakix offers the best comprehensive and managed services for its clients. These brands, which span across all major industries, include Nordstrom, Blue Apron, LG, Birchbox, Fairmont Hotels, UberEATS, Sleep Number, David Yurman, Participant Media, and many more.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 154.05 -0.87 -0.56 19,737,109 Trade
AAPL Apple Inc. 219.31 3.29 1.52 33,024,240 Trade
AMZN Amazon.com Inc. 1,764.03 -6.69 -0.38 5,893,245 Trade

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