Ronn Torossian Ronn Torossian
Social media properties are not the easiest to evaluate. While there’s a lot of money to be made with Facebook, it’s tougher to know just how long social sites like Twitter or Instagram will flourish. But that hasn’t stopped social sites from betting big when they announce their first IPO. The latest site to make that leap is Snap Inc.

The parent company of image sharing social media app Snapchat recently filed its official paperwork hoping to bring in $3 billion for its initial public offering. The shares available will be non-voting shares, so the corporate decision-makers will still maintain control of the company going forward, at least in the short run.

The bigger question than “who’s in charge” relates to valuation. Snapchat is undoubtedly popular. The site claims 158 million daily users and more than 2.5 billion “snaps” created every day. That’s a lot of people and, therefore, a ton of potential lists of private information to resell to advertisers and marketers. But, given the way Snapchat operates, the profit centers for that app are not nearly as developed as those for Facebook.

There’s no doubt the market is a prime one. Snapchat users trend young and impressionable. They are also web savvy and more apt to make quick decisions about what to buy right now based on something they see online. That said, because of the nature of “snaps,” users are not really thinking about products and services when they’re trading pics through the app. There’s some potential for brand influence there, but not nearly as much direct sales opportunities that are offered by other sites or apps.

We don’t need to rely on speculation to make this call. Snapchat admits it continues to struggle to turn a profit, and the company admits it may not have a solution for that key problem anytime soon. Last year alone, the company lost more than half a billion dollars, up from about $373 million the year before.

According to a report published by CNN, Snapchat admits they may never be profitable: “We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability … for all of our history, we have experienced net losses and negative cash flows …”

Not exactly the vote of confidence investors are looking for. Then again, the company has both name recognition and good market placement, with user growth trending upward in an increasingly mobile-focused market.

In the world of public relations, social marketing has — and will — continue to change our business.

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One of America’s most influential public relations executives, Ronn Torossian is the CEO of 5WPR.