Did Kylie Jenner cause Snapchat to lose more than $1 billion in a day? Probably not.


Did Kylie Jenner cause Snapchat to lose more than $1 billion in a day? Probably not.

Since it launched in 2011, Snapchat has been seen as the most likely challenger to Instagram’s throne when it comes to photo-based social media. This has been in no small part due to the tremendous lure of Kylie Jenner, whose account is reportedly the most-viewed one on the platform.

But Jenner’s huge social influence seems to have suddenly backfired for the app — via a tweet she posted on Wednesday that suggested her opinion of Snapchat has soured:

Jenner’s ambivalence regarding the app appeared to have an immediate effect on Snapchat investors. By Thursday at the close of trading, Snapchat’s stock had dropped 6 percent — an estimated loss of between $1.3 billion and $1.6 billion in market value.

As a result, Jenner made headlines for her seeming ability to singlehandedly deal a huge financial blow to a tech industry giant, all with a casual tweet. But there are plenty of factors in play that could have contributed to Snapchat’s stock collapse, and Jenner’s tweet was most likely a tipping point rather than the cause.

Snapchat recently launched a redesign that many of its users hate

Jenner’s tweet follows several months of backlash over a Snapchat update that essentially amounted to a complete redesign of the app’s features and navigation. The redesign started rolling out to users in late November and was fully deployed by mid-January. Jenner had previously complained about the redesign on Twitter, alongside thousands of her followers and other Snapchat users.

Many users complained loudly that Snapchat had made it harder to locate and use many of the app’s most popular features — mainly by moving all their friends’ messages and stories to a different location in the app and reordering them.

Some users hated the update so much that a Change.org petition to revert it snagged 1.2 million signees. A response from Snapchat indicated that the company had heard the complaints and that it would ultimately roll out an update to the update — even while making it clear that users would simply need to adapt to the biggest changes.

Snapchat maintained that its goal in redesigning its app “was to make it easier to connect with the people you care about most.” It repeated that sentiment this week in press statements issued after the stock drop. But a recent internal leak of Snapchat’s metrics revealed that the changes probably had more to do with usage than community-building.

More specifically, it seems likely that the redesign’s emphasis on the app’s chat feature was implemented because of how much more popular the app’s chat feature is than many of its other features; conversely, the redesign also emphasized underused aspects of the app in order to make them more palatable to users. (And, presumably, to advertisers and brands.)

Snapchat was floundering before the update

Snapchat has had an uneven fiscal year — mainly because of Instagram. Instagram has directly targeted Snapchat’s predominantly teen user base by mirroring several of its features, most notably by creating Instagram Stories, a feature of Instagram that is extremely similar to Snapchat Stories and now boasts more users than Snapchat’s entire user base.

Snapchat went public in March 2017 despite warning investors that it might never turn a profit. Then it saw a decline in new users — a trend broadly attributable to the belief held by many that people were using Instagram Stories instead.

By August 2017, predictions loomed that Facebook, which owns Instagram, would ultimately put Snapchat out of business. Then Snapchat suffered three quarters in a row where profits were lower than expected, followed by year-end predictions of ongoing financial gloom.

Snapchat’s final quarter earnings last year were actually better than expected for the first time ever, and the company’s stock was up 25 percent. But that’s partly because investors were reacting with optimism to the redesign — which users turned out to despise.

So all these factors, exacerbated by the groundswell of user outrage throughout the start of 2018, were probably what investors were thinking about when they read Jenner’s tweet. Those who sold their shares probably weren’t reacting specifically to Jenner talking about her Snapchat habits, or worried that she might singlehandedly devalue the app. Instead, they probably saw the tweet as the cap-off to a trend of overall decline.

After all, when a member of the Kardashian family writes off a whole app in public, it’s a message that’s hard to deny.

Still, there are plenty of reason to be enthusiastic about Snapchat’s future. The introduction of its Bitmoji Deluxe feature in January seemed to go over well. Snapchat’s investment in augmented reality (its Lenses feature) seems to be attracting brands left and right. And in the battle between Facebook and Snapchat — where the latter might well stand in for any smaller tech company that dares to cut into Facebook’s market share — investment researchers are betting on Snapchat because of its younger user demographic.

So if you’re thinking about investing in Snapchat, maybe now is the perfect time to dive in. Who knows? Jenner’s tweet could be a blessing in disguise.

Vox has reached out to Snapchat for comment and will update with any response.

Sourse: breakingnews.ie

Did Kylie Jenner cause Snapchat to lose more than $1 billion in a day? Probably not.

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