Oh, Snap! Wall Street likes Snapchat's new numbers, but users hate the interface
The good news for Snapchat ($NYSE:SNAP): It announced one of its best growth quarters yesterday, adding 8.9 million new users. Which is great, but that still only brings it to 187 million users, compared to 500 million for Instagram and 1.4 billion active daily users at Facebook ($NASDAQ:FB). And they're still hemorrhaging money at a phenomenal rate: $3.45 BILLION in losses last year (take THAT, Tesla!). But losses were down for the last quarter, and investors jumped on the stock: Shares rose 35 percent.
The bad news: While Wall Street seems smitten, a lot of Snap's early adopters HATE the direction the company is taking. Snap has been doing a bizarre slow rollout after announcing they'd be completely reinventing the interface last year; yesterday Reddit and Twitter were full of dismayed reaction from the UK launch:
You can see the disconnect pretty distinctly in our data trail - insiders' confidence in their business outlook slumped sharply last September, with no recovery in sight:
In trying to reinvent itself to behave more like Facebook, Snap appears to have adopted some of the most annoying features of Facebook - like having a search algorithm curate what shows up in your feed, rather than just showing your friends' latest posts in chronological order.
There's even a Change.org petition, begging the company to bring back the old interface.
Not everyone hates it - our data shows Snap's app rating at Google Play has been rising modestly but steadily:
"The data shows that despite its perception as a nascent social platform, Snapchat is much more of a chat app, says the DailyBeast's Taylor Lorenz, who gained access to a ton of secret company stats. "And key features like Snap Maps have yet to gain widespread adoption among the app’s user base."
The problem: Snapchat started as a service that lets you, the user, put up a quick little video, and they were successful at that. But then they took the company public, at which point they actually had to make some money. It's hard to dump advertising into personal photos without being incredibly annoying and intrusive, so they graduated to allowing users like CNN and ESPN to feed video content at you.
Is it catching on? BuzzFeed, The New York Times, The Washington Post, Cosmopolitan, and Vogue are just a few of the companies putting out online editions, and Snap says its Superbowl programming earned $100 million dollars, but CNN has quietly dropped its Snap partnership. There's a big push planned for the Olympics; I guess we'll see how that works out.
Lorenz points out that Snap's young userbase still uses it more as a chat and snap platform - sending 34 messages a day on average - and much less as a story platform, and that's not what advertisers are looking for. "Snapchat’s stock was downgraded again on Jan. 4 after a survey found that 96 percent of ad buyers would prefer to buy ads on Instagram over Snapchat."
One of the biggest problems for Snapchat is the fact that it is beaten at its own game by its most powerful competitor. Facebook introduced clones of Snapchat’s popular Stories feature to Instagram, WhatsApp and Messenger in 2016 and 17, respectively, and this copycat approach appears to be working out.
As of October 2017, both Instagram Stories and WhatsApp Status, as the Snapchat-like features are called, had 300 million daily active users, beating Snapchat's daily user count by more than a hundred million. Like Snapchat, Instagram Stories and WhatsApp Status let users apply filters and stickers to videos and photos that disappear after 24 hours.
"Only time will tell if Snap's new strategy will pay off in the long term, but at least right now, it's in good shape heading into 2018," notes Edward Alvarez at Engadget. "And that alone is a win for a company that just a few months ago was in a downward spiral. "