In the "Art of War," ancient Chinese military strategist Sun Tzu advocated encircling your enemy. Now Facebook (FB) is using a similar strategy against Snapchat as its parent Snap (SNAP) is on the verge of a huge IPO.
Facebook's messaging app WhatsApp on Monday began adding an in-app camera for taking pictures and videos and adding a "status" update, much like Snapchat's wildly popular Stories. WhatsApp, used by more than one billion people every month, is launching the service in France, the Netherlands and few other countries before a global rollout.
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Facebook's Instagram launched Instagram Stories in August, and already has 150 million users, about as many users as Snapchat has. The main Facebook app also is beginning to roll out Facebook Stories.
These Facebook offerings may not affect Snapchat's popularity with North American teens and young adults. But it could have a major impact on Snap's ability to "age up" — getting more people over 30 to use its service — and to expand overseas.
Snap conceded in a recent SEC filing that its user growth, notably overseas, had slowed in the second half of 2016, citing competitive products.
Snap is aiming to raise about $3 billion in an IPO that's expected to price next week. That would give the company a valuation of up to $22 billion. But if investors see Snap's user growth as stalled, they may start to see the company as the next Twitter (TWTR) vs. the next Facebook.
Facebook rose 1.8% to close at 136.12 on the stock market today, hitting a record high and now extended from a 129.37 entry. Twitter fell 2.1% to 16.08 as it remains trapped in a three-year downtrend.
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