In March of this year, the used-to-be-uniques social platform Snapchat went public. Within the first 24 hours the company's stock price was up by 44%. Only four months later the stock sees it's first drop in price. Fast forward to November of 2017 and Snap Inc.'s stock is plunging by 17% during after hours trading. Why? Because the company's third quarter earnings were published: and the future does not look bright.
In the earnings report, Snapchat has only seen a 3% increase in the number of users from the previous quarter. This dismal growth can be contributed to rival social media platform Instagram's implementation of similar features. Instagram has already overtaken Snapchat by over 85 million in the amount of users who post stories on a daily basis.
In addition to struggling to gain users, the platform also struggle to maintain advertisement pricing - seeing a 60% drop since shifting to programmatic advertising earlier this year. The platform somewhat counteracted this by increasing page views and ad impressions.
Perhaps the biggest concern was Snap Inc.'s inflated expectations of the demand for their Spectacles. The smart sunglasses was the companies first foray into hardware and created some buzz early on. However, on Tuesday, Snapchat announced it was taking a $40 million write-down on the value of the Spectacles.
On bright spot in the dark time for the platform is their new scripted-content partnership with NBCUniversal. NBCU, which invested $500 million in Snapchat during it's IPO, will work with the company in a joint venture to form a digital studio that will produce original, short-form video first aired exclusively on Snapchat. All content will be tailored for mobile consumption in the platform's vertical visual format. The move comes about a year after Snap signaled its intention to create new original video offering with the launch of "Shows," a new category on its Discover platform. Will this exclusive access to new video content actually incentivize smart phone users to use Snapchat? We will find out soon.
In the earnings report, Snapchat has only seen a 3% increase in the number of users from the previous quarter. This dismal growth can be contributed to rival social media platform Instagram's implementation of similar features. Instagram has already overtaken Snapchat by over 85 million in the amount of users who post stories on a daily basis.
Perhaps the biggest concern was Snap Inc.'s inflated expectations of the demand for their Spectacles. The smart sunglasses was the companies first foray into hardware and created some buzz early on. However, on Tuesday, Snapchat announced it was taking a $40 million write-down on the value of the Spectacles.
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