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Adam Przezdziek / Flickr Creative Commons

Snap reportedly will seek a valuation of $20 billion or more when it goes public in March. But how will it justify such a lofty number, especially when it when compared to Facebook's user growth metrics?

Here's the answer from one Snap investor, who spoke to Axios on background: It's all about quality users.

  • Look at geography: At least 40%, or 60 million, of Snapchat's daily active users are in the U.S. and Canada, with another 50 million in Europe. In CEO Evan Spiegel's eyes, those are the users that translate into the big revenues from ads and e-commerce.
  • Snapchat also pays particular attention to how much time users spend on the app per day, and even per hour. In turn, users who are hooked on the app makes for a great pitch to advertisers.

Facebook was profitable at the time of its IPO, but another Snap investor says that, in the absence of earnings, the key is to prove a predictable business model and consistently hit quarterly numbers. Or, put another way, hit profitability within the time frame you say you're going to hit profitability.

Counterpoint: Of course, not everyone in the Valley is so bullish on Snap—some investors don't think the math adds up at all, as Axios's Dan Primack wrote today.

Go deeper

Dion Rabouin, author of Markets
27 mins ago - Economy & Business

How GameStop exposed the market

Illustration: Eniola Odetunde/Axios

Retail traders have found a cheat code for the stock market, and barring some major action from regulatory authorities or a massive turn in their favored companies, they're going to keep using it to score "tendies" and turn Wall Street on its head.

What's happening: The share prices of companies like GameStop are rocketing higher, based largely on the social media organizing of a 3-million strong group of Redditors who are eagerly piling into companies that big hedge funds are short selling, or betting will fall in price.

Caitlin Owens, author of Vitals
1 hour ago - Health

Who benefits from Biden's move to reopen ACA enrollment

Photo: Chip Somodevilla/Getty Images

Nearly 15 million Americans who are currently uninsured are eligible for coverage on the Affordable Care Act marketplaces, and more than half of them would qualify for subsidies, according to a new Kaiser Family Foundation brief.

Why it matters: President Biden is expected to announce today that he'll be reopening the marketplaces for a special enrollment period from Feb. 15 to May 15, but getting a significant number of people to sign up for coverage will likely require targeted outreach.

2 hours ago - Technology

Big Tech bolts politics

Illustration: Eniola Odetunde/Axios

Big Tech fed politics. Then it bled politics. Now it wants to be dead to politics. 

Why it matters: The social platforms that profited massively on politics and free speech suddenly want a way out — or at least a way to hide until the heat cools.