Snapchat has had a rough 2018 as it has seen its user base erode throughout the year despite its best efforts to retain and attract new users. Ending the year on a poor note, the company’s market cap has reached an all-time low of $6.5 billion from its peak of $31 billion.
A WSJ report highlights how investors are now losing confidence in CEO and Snap founder Evan Spiegel. The CEO unexpectedly announced plans of redesigning Snapchat in late 2017 to the engineering team after his visit to China. He was influenced by all the messaging apps he saw there and took the decision on his gut feeling instead of relying on input from other executives.
Why Snapchat lost Market?
The redesign was implemented without much thought and was rightfully criticized by Snapchat users. Post the redesign, Snapchat saw a decline in its user base as well which has continued since then. There was also a petition to restore the old design of the app which received over a million signatures. It eventually forced Snap to acknowledge that it would bring back some functionality from the old app in the redesigned app, though the new app still remains confusing to use.
Mr. Spiegel has lost credibility with some on Wall Street, says Youssef Squali, lead internet analyst at investment bank SunTrust Robinson Humphrey , who projects Snap will run at a loss until 2021. Of Mr. Spiegel’s decision-making, he says: “He is doing this not just to make money, but to try to prove that he is right.”
The same behavior of Spiegel is blamed for another failure of Snap — Spectacles — which led the company to lose well over $40 million. Citing analyst Youssef Squali, the report highlights that CEO Evan Spiegel himself is to be blamed for most of the issues with Snap right now. His private nature and inability to communicate properly with shareholders and public are not helping the company either.
Ever since the redesigned Snapchat app went live late last year, my Snapchat use has gone down. Now, I barely check the app and it has been quite a few months since I last posted a Snap. The redesigned app just does not feel intuitive to use and its confusing in many parts. While Snap has added new features to the app throughout the year, Instagram has been innovating at a far rapid pace. No wonder then that it continues to gain users while Snapchat has been steadily losing users.
Are you still using Snapchat? Or have you switched to Instagram Stories?
Like this post? Share it!