Sarah Frier: When deciding whether or not to put money into Snap, investors are inevitably going to compare the company to its peers, Twitter and Facebook.
Alex Barinka: So which is Snap hoping you'll equate them to? Well, neither. My sources tell me that Snap execs want you to think of them more like Amazon. Seem strange? Well, there's a method to the madness.
Sarah Frier: Because Snap is such a secretive company, investors will have to decide whether they trust management to build a business on the backs of highly engaged young users.
Alex Barinka: For now, it's unclear what that will look like outside of the Snapchat app and its spectacles.
Sarah Frier: While the company grows and expands, management has told its bankers that financial performance could be, quote, lumpy. And don't forget that Snap's revenue model is only a couple years old. And right now, losses are higher than sales.
Alex Barinka: Sound familiar? Razor-thin margins and fluctuating financial performance are Amazon trademarks.
Sarah Frier: CEO Jeff Bezos has alarmed investors with his massive spending to get into new markets. Some of his efforts have been successful, like Amazon's e-commerce platform or its cloud services, while others have been duds, like its Fire smartphone.
The bottom line is Amazon investors have had to be patient. And in the long run, it's really paid off. The stock is up 43000% since the company went public in 1997. And in the past 10 years, it's up 2100%.
Alex Barinka: But Amazon is a once-in-a-decade consumer internet company, and Snap is a much younger and much riskier bet. For now, Snap CEO Evan Spiegel is going to be left asking potential shareholders to trust him.