SNAP — Snapchat Expained
The advent of Snapchat has disrupted the entire social media industry where its story and streaks features have been extensively adopted by the general public and copied by the social media giants Facebook as well.
In 2011 when it just started, it was called Picaboo. The founder, Evan Spiegel and Bobby Murphy from Stanford had an idea to allow photos to be shared and vanished. Problems when photos were used to occupy a lot of data storage and they were problematic to be deleted one by one in the past. It develops a great sense of security and intimacy within the conversions with the notification of someone takes a screenshot of it. Then, the story feature captures a nutshell of moments you would like to share and this was sooner copied by Facebook, Instagram, WhatsApp and Wechat etc.
With the end-goal of reshaping our form of communication to become more natural and adjust the way social media makes advertisements. Their state-of-the-art ideas have created features like swipe navigations filters, in-app profiles with bitmoji and group chats and most importantly the beauty filter. Interestingly, Mark Zuckerberg has offered twice to Evan Spiegel for the ownership of Snapchat for 60 millions and 3 billions in 2013. As we know, he turned Facebook off and established more features and scaled up.
From 2015 to 2016, the app users were sending from over 2 billions to 10 billion videos over the year. With this astounding growth, the social media company with over 50 million active users has decided to go public and it marked the beginning of the downtrend of the giant social application.
In March 2, 2017 — Snapchat had its Initial Public Offerings in the New York Stock Exchange. Snapchat was doing super hot with a market capitalization of $35 billions, which is tripled the size of Twitters and exceeded the company’s expectations by 40%.
Later on, Snapchat established ‘local live channels’ and ‘discovery channels’ with Advertising Campaigns in order to diversify its revenue streams as well as to target the middle-age population. Few months after in July 2017, the company established the ‘Snap-Map’ feature where your network has been displayed within a world map in the application. These all innovations had generated high volumes of user interactions and further branded Snapchat itself as a socially distinct communication tool.
However, all these tools have not really reflected within the snapshat stocks, after the first week of trading at the range from $24 to $27, the company has shown a mildly decrease trend overtime and hit $5 at its all-time low in late 2018 due to the market crash by the U.S Government shutdown.
Why? It is not only because of its incapability to generate profit, it is because of the tightening competitions and the loss of past users. Which led to the most important issue — where executives decide to move away.
But the real question is, how did Snapchat come back from the adversity?
Thanks to the major feature updates. Firstly, they launched the Snap Kit with Pandora as music streaming launch partner in mid2018, where music can be recognized by recording and it directs you to Pandora music platform. Then they launched the Snap Originals right before the government shutdown happened where Snapchat firstly had their serialized show including their first formal slate of scripted shows and docu-series.
This led to super strong market recovery along with the market where Snapchat has doubled its shares into from $5 to $11 dollars. In the management team, they have also brought new blood to the executive board where they have appointed Kenny Mitchell (Prior VP McDonalds Brand Engagement) as Chief Marketing Officer.
In terms of operation, they have just released the ‘Snap Game’ mode within Snapchat which is super appealing to its target 18–24 age group including games like ‘Bitmoji Party’, ‘Snake Squad’ and ‘Tiny Royale”. They are respectively similar to popular games like Mario Party by Nintendo, Slither by Agario developer and Fortnite by Epic Games.
Furthermore, results of the first quarter of 2019 concluding in March has beaten market expectations where they had a higher recorded sales of $320 million sales compared to investor’s expectations as $307. They have also released the earning guidance of the 2nd quarter would lie between $335 million to $360 million. All of these signs have signs of solid momentum.
Today, although Snapchat remains the led of the 18–24 age group but the rising competitions will be a big threat to the company since Pinterest has just entered the competitions and the rise of the Chinese social media app ‘TikTok’ as well. The land scale of these applications has remained saturated for a while and snapchat would really have to work on its product to ultimately develop customer loyalty in order to differentiate themselves.
Overall, the intriguing Snap’s redemption story has marked the importance of human capital and product development. Fortunately, Snapchat has grown at the best time where the competitive landscape was not as tighten as now. I would be interested to see how Snapchat is going to develop its hardware business and would they acquire/merge with other tech giants to integrate its operations vertically.
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