NBCUniversal has invested $500 million in Snapchat's parent company Snap Inc's IPO as "part of a strategic investment and partnership" according to sources, CNBC first reported Friday, March 3.
NBCUniversal Shells Out Steep Investment For Snap
The investment stands as an additional inroad in a series of aggressive bets in the digital media space by NBCUniversal, which is presently helmed by Steve Burke. Burke has shelled out other investments to digital-focused fonts recently, having invested $400 million in BuzzFeed and $200 million in Vox.
NBCUniversal also recently acquired SportsEngine, a digital venture for the youth involved in local team sports. The company has spent a total of $1.5 billion betting on digital assets in just a year and a half, according to CNBC.
"We will continue to be aggressive as digital content consumption increases," Burke said. "It is rare to have the opportunity to invest at this stage in a company as visionary and dynamic as Snap."
No Long Term Success For Snap IPO?
Snap's New York Stock Exchange debut comes as a significant inflection point for the camera company, popularly known for its product Snapchat, a photo messaging service which lets users upload content with an expiration date. The company, which is seen as a threat to Facebook and Twitter — with the former hell-bent on copying its features as a result — saw its shares bumped to 44 percent on the first trading day, although critics believe it won't be for long, citing trouble spots such as losses and a decline in daily active users as proof of its eventual plunge.
Analyst predict Snap's success to dip moving forward, citing exposure to its sub-optimal corporate structure as another reason for a downward bout, on top of the company's management team lacking experience in transforming a product into a successful company.
NBCUniversal is the only U.S. media company to invest as early as the IPO phase, according to CNBC.
"It is rare to have the opportunity to invest at this stage in a company as visionary and dynamic as Snap, and it is a compliment that they chose NBCU as a partner," Burke wrote in his letter to employees.
With Snap's shares on the rise since its public trading debut, NBCUniversal's investment was worth $784 million by early Friday, according to the Los Angeles Times. The partnership between two companies lends NBCUniversal an opportunity to establish new programming using its content and brands to reach millennials, the group hardest to reach via advertising, especially on traditional TV platforms.
NBCUniversal reportedly courted Evan Spiegel, Snap's CEO, for "the past year." both companies have previously worked together alongside BuzzFeed during the Olympics, which lended Snapchat 2 billion views.
NBCUniversal has agreed to hold the shares for at least a year, according to CNBC.
Snap's IPO was one of the most anticipated public offerings for a tech company since Twitter's IPO in 2013. Eyes are keenly on Snapchat at present, as it proves it won't mirror Twitter's stock exchange trajectory, which saw a solid trading day followed by abysmal results in the succeeding months.