Snapchat’s Redesign Causes Stock To Drop

Last updated on June 9th, 2018 at 12:43 pm

Snapchat users aren’t happy. And it shows. Shares in Snap, Snapchat’s parent company, hit a record low after revealing its results for the first quarter of 2018, warning investors of “substantial decelerating growth” in Q2. After releasing the numbers for the first quarter, Snap’s share price fell as low as $11.50, trading about 17% below its IPO price of $17.

Even though Snap made a huge leap last year by adding over 8 million new users, it’s continually struggling with its competition copying key-features. But that’s not the reason for the bad results in the first quarter of 2018. The problem causing the bad results can be led back to Snapchat’s redesign, which was rolled out in January. The redesign made headlines, and not because users were a big fan. The update caused controversy with people claiming the app wasn’t usable anymore due to bad design.

Snapchat also had some backslash from inappropriate ads, which caused big celebrities like Rihanna and Chrissy Teigen to publicly announce to stop using the platform. That’s a possible $100 million hit.

Not the best quarter, and it shows in Snaps revenue. Analysts forecasted a revenue of $244.5 million, but Snap reported a “mere” $230.7 million. The same goes for daily active users, reported 191 million, which is lower than the expected 194.14 million user. This might not seem like a huge gap, but makes all the difference for advertisers and Snaps shares.

Evan Spiegel, founder of Snapchat, claims the redesign “created some headwinds in our revenue this quarter … and creating some apprehension among our advertising partners”.

It’s still unclear wheter Snap will listen to their user base and revert the redesign. An online petition to undo the redesign was signed over a million times, showing it might not be a bad idea for Snapchat to change the design and generate some goodwill amongst its (ex)users.

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Written by Djordi Johan

Marketing enthusiast, crypto hodler, co-founder NicheHunt.