Immediate boost to top line
Snap (SNAP) has considered venturing into the drone business for a while now, according to various media reports. Combining internal innovations and outside technologies could help Snap accelerate its penetration of the drone market. Besides bringing much-needed technology and experience, Zero Zero Robotics would provide an immediate boost to Snap’s top line considering that it is a business that already generates revenue. Zero Zero Robotics distributes its drones through Apple (AAPL) stores. The drones, called Hover Camera Passport, go for $500.
$3.3 billion up for grabs
A successful drone venture could unlock a significant new revenue source for Snap. The consumer drone market that Snap is targeting is expected to be worth $3.3 billion by 2020, according to Goldman Sachs Research. The market was worth about $700 million in 2014, as shown in the chart above.
Claiming even a small share of this growing market could have a transformative impact on Snap’s financials. As of 1Q17, the company had generated $515 million in total revenue in the trailing 12 months, a tiny figure compared to what its rivals Facebook (FB), Alphabet (GOOGL), and Twitter (TWTR) generated in the same period.
Taking on wealthier rivals isn’t easy
The small revenue that Snap generates means that it has a difficult time competing with larger and wealthier competitors such as Facebook and Alphabet’s Google. But a drone venture breakthrough could change Snap’s competition narrative.