Snapchat’s Not-Growing Pains Are Good News for Instagram

Facebook once failed to buy Snapchat; ever since, it’s tried to copy it, mostly without success. Until now. Facebook’s Instagram Stories, a clear Snapchat clone, has more daily users than Snapchat itself — and parent company Snap Inc. should be very worried.

Snap’s latest earnings report isn’t helping either. On Thursday, the company said user growth for the April-June period was a paltry 4 percent from the previous quarter.

Snap’s stock, already down 44 percent since its initial public offering in May, declined 14 percent, to $ 11.90, in extended trading after the results came out. That’s less than half of the $ 24.48 closing price on its first trading day.

While the doom doesn’t spell imminent death, it’s a sign that Snapchat could be relegated to the sidelines as a niche app for young people — or worse, a passing fad — rather than a major competitor for digital ad dollars like Facebook and yes, even the struggling Twitter.

An analyst for Morgan Stanley, the lead underwriter for Snap’s IPO, recently cut his rating of the company’s stock, citing competition from Instagram and worries that Snap’s advertising offerings aren’t evolving or improving. The analyst, Brian Nowak, said the company needs to do more so that advertisers don’t see it as a mere experiment, but a serious player.


By the Numbers

Instagram recently disclosed that Stories, which lets people share videos and snapshots in a continuous 24-hour loop, has amassed 250 million daily users in the year since it launched.

Snapchat, in comparison, had 173 million in the second quarter — and that’s all of Snapchat, not just its version of Stories. Instagram in its entirety, meanwhile, had more than 400 million daily users as of February, the last official count.

Snap said Thursday that it lost $ 443 million, or 36 cents per share, in the second quarter. That compares…

Full Story Via NewsFactor Network

Comments are closed.