Should Facebook Investors Start Worrying About Snap's IPO?

The investment case for Facebook Inc FB couldn't have been made clearer to investors over the years: The rising popularity of the social media empire coupled with the decline of traditional media makes it a very appealing destination for advertisers.

Facebook's dominance in social media remains unchallenged as evident by its multiple properties that boast more than 1 billion users.

However, investors assuming Facebook's dominance remains unchallenged indefinitely should consider what WPP's CEO Martin Sorrell is saying.

Could Snap Snatch Up Ad Dollars?

WPP is the world's largest advertising firm, and its clients spent $90 million advertising on Snapchat's platform last year, three times more than expected.

Sorrell told CNBC that at the beginning of 2016 he initially expected clients to spend $30 million on Snapchat. By December, the executive forecast clients would spend just $70 million on the platform.

Given the fact that spending exceeding expectations, Facebook investors have reason to be concerned that advertisers are gravitating toward Snapchat's platform.

"It does become a threatening alternative to Facebook and I think that's the big opportunity for [Snapchat]," the CEO said. "We know Facebook have tried to buy Snapchat a couple of times, we know that they've made product changes as a result of Snapchat's products. I think Facebook is concerned about the potential opposition."

Sorrell further noted that the ongoing hot topic of "fake news" on Facebook's platform serves as another opportunity for Snapchat to capitalize on its momentum. In addition, Facebook's admission of releasing incorrect metrics in December may be causing advertisers to "try and experiment" with Snapchat.

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Posted In: Analyst ColorCNBCNewsIPOsTechMediaTrading IdeasFacebook AdvertisingFake NewsMartin SorrellSNAPSnapChatSnapchat AdvertisingWPPWWP
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