Flashback to December 1st
In one of the articles in the "stocks I'm watching" series, I made a statement on Evan Spiegel, the CEO of Snapchat, who had intentions on changing Snapchats platform to better suit advertisers, increase new users, and daily active users.
It's a very optimistic outlook, a very dangerous play to make on behalf the CEO however. I advised not to go through with a redesign since we are so adapted to using Snapchat the way it looks and functions.
Judgment day: Snapchat updates
Sure enough, Evan did not heed my warning (cause who the fuck actually reads this blog?) and the feedback is ludicrous.
A whopping 1.3 million retweets later and it's safe to say that a lot of folks don't really like the new Snap update. Keep in mind, Snapchat rolled out their update after the 3rd quarter in certain countries. It's safe to say that we can see the impact on their 4th quarter earnings after their update.
Snap reported earnings
Snap inc. reported earnings, EPS of -0.13 versus an estimated -0.16, ads on Snap are being viewed for the 10-second time frame, revenue of $285 million versus an estimated $256 million, and adding 8.9 million new users in the past 3 month, 18% increase from last year.
Sure enough, with numbers like that being reported, you best believe the stock price will go up. The redesign of Snapchat is formatted where you can view their "discover" section or where the majority of paid content, influencers, etc. can be found and it has increased their viewership by 40%. This has proven well to new users and users above the age of 35.
BUT, the user interface in Snap has become more frustrating/annoying, for those who would like to view their friends' stories. Obligating to click on your friends profile and clicking on their story to rewatch it. Viewing your own story has also gotten frustrating/annoying. Humans, can't readjust themselves to a new interface quickly, they also enjoy simple things. Asking for Snaps users to click numerous things before viewing anything is tedious.
Quarter 1 will be quite the sight. I genuinely think that Snap will beat revenue estimates again, have a higher EPS, and add new users. Why? If Snap is already reporting ads being viewed at a good rate, while also emphasizing people to use the "Discover" section on Snap, which brings in revenues for Snap, it could help them have another phenomenal quarter. However, daily active users should decrease if Snap consumers do not get adjusted to the new platform or if Snap does not reach a compromise on creating an interface that is satisfying the user and the advertisers. If not, the users will most likely move to Facebook's Instagram stories, followed by the advertisers if they see a sudden decrease in the number of ad views/clicks. Ultimately, hurting Snaps future financial quarters for this year.
But what do you say? What does the future hold for the good old camera company Snapchat?