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Snapchat’s User Engagement Witnesses 40% Rise Since June


Per a recent report by Axios, Snap Inc. SNAP witnessed a 40% increase in submission of Stories since Snap unveiled its location based Map feature in June 2017. The feature helps users find friends by sharing his/her location on a map.

Snap Maps is said to have gained popularity when Harvey and Irma wreaked havoc. Users were able to understand the current weather conditions by viewing related posts made by others.

Reportedly, Snap Map is based on its acquisition of Zenly, a French social map app for which Snap is said to have shelled out $213 million in cash.

Notably, shares of Snap have declined 39.6% since its listing date of Mar 2, 2017, against 11.5% growth of its industry.

Efforts to Boost User Base

The rising popularity of Facebook’s FB Instragram Stories is believed to be the primary reason for the slowdown in Snapchat’s user growth. Instagram totally copied Snapchat's Stories feature including the name. Instagram Stories reportedly has more than 250 million users, substantially higher than Snapchat’s 173 million.

In August last year, Facebook added the “Stories” feature to Instagram. In November 2016, Instagram started allowing users to add links to their Stories. Later, Facebook launched the same on Messenger, WhatsApp as well as on its main platform.

Snap is striving hard to boost user base and win over investors’ confidence. It recently collaborated with artist Jeff Koons to unveil an art platform. The company introduced “World Lenses” in April 2017 and further rolled out 3D Bitmoji World Lenses last month.

Reportedly, Snapchat’s use in AR is ahead of Apple AAPL and Facebook with the company’s “more than one third of daily users” engaging with the technology.

Snapchat also announced that since the launch of Spectacles last year, the company has sold over 150,000 units of it.

Snap is also aggressively ramping up its original content efforts in a bid to attract new subscribers and survive tough competition from established players like Netflix NFLX, Amazon Prime, Hulu and HBO.

Per Business Insider, the company projects users to send over a trillion Snaps this year or nearly 3 billion daily.

As we know, user growth holds the key to attracting advertisers, which is the primary source of revenues for Snap. A slowdown in user base may look unattractive to advertisers.

We believe the increase in user engagement will place it better in such a competitive environment and generate more advertising revenues for the company.

Currently, Snapchat has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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