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SnapChat Struggles To Retain Its Userbase

A number of people using the app SnapChat continue to go down as competition from Instagram grows as does the backlash to its app redesign. SnapChat’s parent company Snap, which had gone public in March 2017, reported the number of daily users to be 186 million for three months that ended with September. The number showed a decline of 1% as compared to the preceding quarter and was also not up to the expectations of analysts who had number the 187.5 million in mind. The app had lost active daily users once earlier when the number fell by 3 million in the 2nd quarter of 2018. Evan Spiegel, the CEO, said on Thursday that mostly Android users were responsible for the decline and hence development of a newer and better version of their Android application is in order. Snap expects that the number of daily users will further decline in the 4th quarter.

There were however a few good things happening at around the same time of loss of daily users like revenue growth by 43% to $298m which surpassed expectations of analysts. There was also a loss of 12 cents/share. As Wall Street expected, there was initially a rise which later fell in extended trading by 12%.

As Instagram copies more and more of SnapChat’s features like stories, the latter struggles more. Adding to the problem is the new design of the app which was done to attract new users but instead ended up becoming so confusing that the app’s core younger users criticized the rocky redesign severely. Senior analyst at Forrester Jessica Liu said that the biggest issue that people face with SnapChat is its lack of clarity which makes it less popular outside the under-30 demographic, especially in an era which is filled with social media applications. Spiegel stated that the company had created several more complexities while intending to solve an issue.

There have been several executives who have come and left Snap like Steve LaBella, Imran Khan, Drew Vollero and Tom Conrad. Furthermore following the exit of Emily White in 2015, Snap hasn’t had a COO. The company announced the hiring of Jeremi Gorman and Jared Grusd, chief business and strategy officers respectively, earlier this week. Analysts like Brian Wieser however seem to believe that keeping the current stock price scenario in mind, Snap could go private. Also the number of people viewing the app’s premium content like 21 of its original shows went above 10 million.

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