Can Snapchat bounce back?

Snapchat loses millions of users after redesign

Business Insider

Snapchat is stalling out, and there's not much hope that it'll get back on track

  • Snap's quarterly report Tuesday showed how the company is rapidly maturing.

  • It's losing users, revenue growth is slowing markedly, and things look like they'll only get worse from here.

  • That's bad news for investors who have already had to endure a stock that's below its public offering price and repeated disappointments from the company.

For a little bit on Tuesday, Snap investors thought they had something to cheer about.

Then reality hit, and they collectively seemed to collectively realize they may be holding the next Twitter - a stock that carried a lot of hype at IPO, but which never seemed to live up to its full potential.

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Snapchat users turned off by redesign

By Daniel J. McLaughlin

If it ain't broke, the old saying, don't fix it. Snapchat has run afoul of this adage, and they have meddled with a winning formula - and for the first time, they are starting to lose out.

The photo sharing app appeals to a younger audience, millennials and the younger Generation Z, who advertisers were salivating over the prospect of reaching them. Snap, the app's parent company, went public in March last year, and their stock was sought after - but over a year as a public company, things are not as rosy as it once was.

A disastrous redesign of Snapchat has resulted in the app losing millions of users. Snap reported that the number of people using the service on a daily basis has dropped for the first time. Over the April-to-June period, its parent company said it attracted 188 million daily active users, or two per cent, which is three million fewer than over the previous quarter.

It may have lost users, but there was a bit of good news. Snapchat has seen new user retention for people over 35 grow more than eight per cent since redesigning the app earlier this year, according to CNN.

Snap also experienced a 11 per cent bump in share price in after-hours trading after a $250 million (£193 million) investment from Saudi prince Alwaleed bin Talal. However, it ultimately closed down two per cent at $12.90.

Despite the drop in daily users, it has seen good revenue numbers. Snap managed to beat Wall Street’s expectations for both revenue and losses, the Guardian reports. It reported second quarter revenues of $262.3 million against analyst estimates of $249.8 million, an increase of 44 per cent over the same period last year. Overall, the company posted a loss of $353 million, or 27 cents a share, down from a loss of 36 cents a share a year ago.

Snap CEO Evan Spiegel has admitted that the February Snapchat redesign has resulted in a drop of users. He said in prepared remarks on an investors' call: "This was primarily driven by a slightly lower frequency of use among our user base due to the disruption caused by our redesign.

"It has been approximately six months since we broadly rolled out the redesign of our application, and we have been working hard to iterate and improve Snapchat based on the feedback from our community."

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Daily Telegraph

How Snap can bounce back from its first ever decline in user numbers

In early 2017, Snap was heralded by investors as the new Facebook. The parent company of Snapchat, which appeals to a younger demographic, had just listed on the New York Stock Exchange valued at a record $3.4bn. It was at the top of its game.

But more than a year later, Snap's stock has proved that hype isn't everything. Share prices failed to live up to initial expectations and did not reach the heights of the listing price of $17.

The firm's 44pc increase in revenue during Q2, reported Tuesday, was overshadowed by a 3 million drop in daily active users.

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