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Snap CEO's Focus on Spectacles Underscores Hardware Ambitions

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Reportedly, Snap Inc (SNAP - Free Report) CEO Evan Spiegel has said that the company has sold over 150,000 Snapchat Spectacles since the specs debuted almost a year back.

Speaking at the Vanity Fair’s New Establishment Summit in California, Spiegel was quoted by media reports saying that the sales number exceeded internal expectations of 100,000. He also added that the specs underscored the company’s efforts to increase its presence in hardware products. Snap has always marketed itself as a camera company.

Spiegel said, “Our view is that hardware is going to be an important vehicle for delivering our customer experience, maybe in a decade. But if we believe it's going to be important in a decade, we don't want to be starting a decade from now." The company is already working on second generation specs that support augmented reality.

Snap Inc. Price

Snap Inc. Price | Snap Inc. Quote

Per media reports, Snap recently restructured its hardware division with the layoff of a dozen employees and named Mark Randall chief of the hardware division. Ex-chief Steve Horowitz has been shifted to a different position at Snap.

Spiegel’s hardware ambitions are well reflected in his bold move to compare Spectacles with Apple’s iPod. Snapchat Specs outsold 143,000 units of iPod sold in its first year, way back in 2002. iPod has been a revolutionary product that changed the music industry landscape and went on to sell 300 million units in its lifespan.

Snap also said that the company collaborated with artist Jeff Koons to unveil an art platform that uses augmented reality (AR). The platform allows users to view art installations held at specific locations and provides them with proper directions.

Per reports, Spiegel also said that he faltered at selling his long-term vision to investors and underscored the need of better communication with the investor community. He understood that the investor community was wary of Snap’s future because of stiffening competition but he said, “I think those are kind of normal fears for any start-up – and the really successful companies just grow through that. And that's why we've just tried to stay focused on the business this year and execute and deliver results."

The company has been facing severe competition from Facebook’s Instagram, which has 800 million users. Further, Instagram Stories, a copy of Snapchat’s feature of the same name, was recently reported to have crossed 250 million users, substantially outperforming Snapchat’s 173 million.

Notably, shares of Snap have declined 40.7% since its listing date of Mar 2, 2017 against 8.3% growth of its industry.

Recently, research firm eMarketer once again slashed the 2017 U.S. ad revenue estimates for Snap from $770 million to $642.5 million. The market research firm had earlier in March slashed the domestic ad revenue forecast from $805 million to $770 million.

Currently, Snap has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Top-ranked stocks in the broader technology sector include NVIDIA Corporation (NVDA - Free Report) Applied Materials (AMAT - Free Report) and Jabil Inc (JBL - Free Report) . All sport a Zacks Rank #1.

Long-term earnings growth rate for NVIDIA, Applied Materials and Jabil is currently projected to be 10.3%, 17.1% and 12%, respectively.

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