Snap Strikes Content Partnership with Time Warner for $100M

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Snap IncSNAP is aggressively ramping up its original content efforts. Per The Wall Street Journal, the parent company of Snapchat has inked a $100 million content deal with media giant, Time Warner Inc TWX . Shares of Snap were up nearly 2% following the reports and closed at $17.88, a shade above its initial price offering of $17.

Under the terms of the two-year deal, Time Warner will be creating 10 shows for Snapchat across various genres. Even popular talk shows like Ellen DeGeneres and Samantha Bee could be available on Snapchat, adds the report further. With this, the number of shows on Snapchat will grow to three per day by 2017-end from just one streamed at present.

Snap's VP of Content,  Nick Bell, was quoted saying "another exciting step as we continue to branch out into new genres, including scripted dramas, comedies, daily news shows, documentaries and beyond."

Time Warner will also be buying ads on Snapchat for its networks -- Warner Bros, HBO and Turner. Snap will share ad revenues in a ratio of 50:50 with its media partners, per media reports.

Snap is hawk eyed on boosting the TV-style content on it platform to increase engagement. Also, online video is the most lucrative component of digital advertising. A few days back, the company had inked a deal with NBC Universal for 2018 Winter Olympics. Earlier, it had brought on board The Walt Disney Company's ABC network as well as BBC and Vice Media.

Snap Inc. Price

Snap Inc. Price | Snap Inc. Quote

However, stiff competition from the likes of Alphabet GOOGL and Facebook FB as well as smaller rivals like Twitter in the digital ad market remains an area of major concern

As a matter of fact, Facebook outshines Snap in almost all aspects. The company enjoys a first-mover advantage in the social media space, with over 1.9 billion users from every segment of demography. It has a gargantuan base of over 1 billion DAUs compared with 166 million for Snap. Facebook presents a much larger canvas for advertisers than Snapchat. The total addressable market (TAM) of Facebook has been reported to be 80% bigger than that of Snap.

Interestingly, analysts have related slowdown in user growth for Snapchat to the popularity of Instagram stories, a blatant rip-off of the former's hallmark feature.

Zacks Rank & Share Price Movement

At present, Snap carries a Zacks Rank #3 (Hold). You can see  the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Despite a brilliant IPO, Snap has had a tough time keeping the momentum going. Wall Street remains divided in its opinion about the stock, with the majority having cautious sentiments. Since Mar 2, the company's shares declined 26.96% against the Zacks  Internet Software  industry's gain of 9.47%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: TWX , FB , GOOGL , SNAP

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