When Snapchat came on the scene back in 2011 it was an instant hit. Teenagers flocked to the app downloading it to their smartphones and oversharing everything with their friends. The app raised money and Evan Spiegel and his under the radar partner Bobby Murphy were riding high with hefty networths and hype to match. But then came time for the app to grow up and start making some real money. Spiegel and company created Snap Inc and took it public with strong winds of hype at their backs. Both Evan and Bobby became new billionaires and all was well, until Wall Street started paying close attention and the company and its products including its ‘Spectacles’ started to show signs of peak. User growth slowed the stock started to slide and investors were getting a bad taste in their mouth. Some wondered out loud if they bought into a fad.
On top of all of this, Facebook began to wage a brutal war against Snapchat via its Instagram app which copied some of Snapchat’s features only to do it better. Copying Snapchat to launch its stories feature was great for Instagram but it was all bad news for Snapchat which started to lose brands and users. Snapchat while under assault from Instagram continued to role out new products and improve current features but for some reason it wasn’t enough. Though the app continues to be highly popular among teens, the popularity hasn’t spread beyond its current user base, at least not by much. Its all good to be popular among teens but that means nothing if that audience is not expanding. This lead to some brands pumping their brakes and focusing their strategy on the bigger Instagram audience. Instagram’s Stories has more active daily users (300 million) than Snapchat has overall users (150 million). Snap’s stock has not returned to its glory days because investors are weary and Facebook’s campaign to “destroy” it is ongoing.
Its 2017 Q3 report was another downer with weak revenue and increasingly slow user growth. Mad Money host Jim Cramer even went as far as saying that people should only use Snapchat, not own it. On top of the weak revenue and continued lackluster user growth, Snapchat lost millions on its much hyped Spectacles. The company overestimated that hype and got stuck with thousands of unsold Spectacles which lead to a $40 million charge. Pushing into more original programming has not changed the company’s downward trajectory and some on Wall Street are saying “TOLD YOU SO”. But not everyone is cold on Snapchat. China based Tencent, the company behind the popular messaging platform WeChat has bitten off a 12% stake in Snap Inc worth $2 billion. This has prompted others to move on the stock as well. Unfortunately, this news didn’t move the stock price much and some don’t think the investment will save the company.
So with a bleaky quarter and continued proxy war with Facebook, what is Snap’s plan to attract new users and in return hopefully increase its revenues? CEO Even Spiegel finally admitted that the app was complicated to use for many users and so they will be rolling out a brand new design just in time for Christmas on December 4. This is in addition to its recent announcement that it will be launching a desktop app for Google’s soon to be released Pixelbook. But is this the answer to Snapchat’s user growth problem? Nothing the company has introduced since going public has sparked interest from new users. Though Companies like Hearst and others continue to invest in their Snapchat Discover strategies, others have opted to pull back while Snapchat Discover figures out exactly what it wants to be. With all the news coming out of Snap Inc related to its poor Q3 performance, Twitter had the best reactions to its plans to redesign the app and yes the ‘Spectacle’ spectacle.
— Ivan ♒️🇪🇺🇬🇧 (@ivanelpetrenkov) November 8, 2017
— Kayhan Anjum Suleman (@7kayhan) November 8, 2017
In my humble opinion everything on #Snapchat should never be seen by anybody. Garbage service. Literally trash. Brother had a wedding in Vegas, I muted the hell out of the entire thing. God DAMN i love this #280characters thing!
— GoGoGadge7 (@GoGoGadge7) November 8, 2017
— Mr Doyle (@JamesDoyle1983) November 8, 2017
I’m glad #Snapchat is finally going to redesign its app. The current app is very unintuitive and confusing for new users.
— Tom 🚀 (@Thomson_MD) November 8, 2017
— Wellcut.io (@Wellcut_io) November 8, 2017
— Common White Girl (@girlhoodposts) November 6, 2017
— ävä 🥀 (@avalynn_31) November 6, 2017
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