Until now. Facebook Instagram Stories, a clear clone Snapchat, has more users daily than Snapchat itself – and parent company Snap Inc. must be very concerned.
Snap’s latest earnings report does not help, either. On Thursday, the company said user growth for the April-June period was at least 4 percent from the previous quarter.
Snap shares, already down 44 percent since its initial public offering in May, fell 14 percent to $ 11.90 in the extended deal after the results came out. That’s less than half the closing price of $ 24.48 on its first trading day.
While punishment does not mean imminent death, it is a sign that Snapchat could be relegated to the sidelines as a niche application for young people – or worse, a passing fad – rather than a major competitor for digital advertising dollars like Facebook And yes, even Twitter that fight.
An analyst at Morgan Stanley, Snap’s IPO chief undersecretary, recently cut his rating on the company’s stock, citing Instagram’s competition and fears that Snap’s advertising offerings are not evolving or improving. Analyst Brian Nowak said the company needs to do more so advertisers do not see it as a mere experiment, but as a serious player.
FOR THE NUMBERS
Instagram recently revealed that Stories, which allows people to share videos and snapshots in a 24-hour continuous loop, has accumulated 250 million users daily in the year since it was launched.
Snapchat, by comparison, had 173 million in the second quarter – and that’s all Snapchat, not just their version of Stories. Instagram in its entirety, meanwhile, had more than 400 million users daily from February, the last official count.
Snap said on Thursday it lost $ 443 million, or 36 cents a share, in the second quarter. This compares to a loss of $ 116 million, or 14 cents a share, a year earlier. Revenue rose to $ 182 million, more than double from $ 72 million a year earlier, but below analysts’ expectations.
FOR GROWING OR NOT GROWING
“Facebook has proven to be a fierce competitor,” said Gartner analyst Brian Blau. Facebook, he added, understands how to get more and more people to subscribe and continue to use their services.
Snap CEO Evan Spiegel has long championed the company’s decision not to make user growth its primary mission. He does not even like to call Snapchat a social network; He insists it’s a chamber company.
“There’s a lot of this in our industry called growth hacking, where a lot of push notifications are being sent to users or you’re trying to get them to do things that might be unnatural or something,” Spiegel told investors in May.
Although it is an easy way to grow daily users quickly, Spiegel said, Snap does not believe “such techniques are very sustainable in the long run.”
Facebook sends out notifications for all sorts of things, like a friend doing a live video or another friend posting something after a prolonged absence. Another could be in a new item for sale in the “market” section of the service. These notifications – which appear primarily on the Facebook application but can also be sent to the phone’s home screen – can conceivably bring people back day after day.
While Snapchat sends fewer notifications, it encourages daily use through Snapstreak, which calls out to streaks where two friends send each other out at least once for more than three consecutive days. But it is not working very well, since daily use has not grown much.
RIVALS ON RIVALS
Rivals are not always successful. Facebook recently closed Lifestage, which allows those 21 and under to share photos, selfies and videos with their classmates. Lifestage was aimed at high school students – a large part of the Snapchat audience.
Prior to that, Facebook killed Slingshot, another Snapchat clone to send missing messages. In turn, they followed the demise of Poke, which also allows people to send photos and videos. All that followed Snapchat’s decision to refuse the $ 3 billion Facebook bid for the service in 2013.
But Facebook and others were still trying and trying, until Facebook was successful with Instagram Stories. Easy to use and leveraging the existing popularity of Instagram, Stories expanded the idea of Snapchat to a wider range of users. While the audience
