Snapchat News & Updates - Week in Review

Greetings, and welcome to this week’s review. Last week, I discussed the potential for a lessening of conflict among social media platforms; this week, my focus is on a growing challenge to Facebook’s business.

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Initially, I found it difficult to avoid discussing Quibi this week, but opinions on that subject were expressed rapidly following the announcement, and I’ve already shared some thoughts on it here. I will simply state that while Quibi encountered specific challenges related to mobile platforms, unless Apple alters its strategy or invests significantly in acquiring content to expand its library, I believe TV+ may be the next service to be discontinued.

https://twitter.com/lucasmtny/status/1318998647900549120?s=20

This week, I’m examining a startup that was once viewed negatively, but has experienced a significant turnaround over the past two years. Snap, the company behind Snapchat, recently announced a very strong earnings report, which led investors to drive the stock price upward. Its market capitalization has almost doubled since the beginning of September, and it’s evident that Wall Street now believes Snap has the potential to substantially grow its influence and compete with Facebook.

The company concluded the week with a market capitalization just under $65 billion, which is still considerably less than Facebook’s $811 billion, but represents a substantial improvement compared to early 2019, when it was valued at approximately one-tenth of its current worth. Suddenly, Snap faces a new hurdle: meeting these elevated expectations.

The company reported $679 million in revenue for Q3, a 52% increase compared to the same period last year. Currently, Snap has 249 million daily active users, a 4% increase from the previous quarter.

Facebook will release its Q3 earnings report next week, but for now, its figures remain in a different range. Even though its market capitalization is roughly 12 times that of Snap’s, its quarterly revenue from Q2 was about 28 times higher than Snap’s recent report. Furthermore, Facebook has 1.79 billion daily active users, approximately 7 times the number of Snapchat’s users.

Snap has dedicated a considerable amount of time to demonstrating the value of features it has been developing for years, but the company’s next challenge may be to diversify its future endeavors. The company has been exploring augmented reality for some time, patiently awaiting the appropriate moment to broaden its scope, but Snap hasn’t been able to afford diverting resources from initiatives that don’t drive users back to its primary platform. Some of its most significant launches in 2020 have been embeddable mini-applications for tasks like purchasing movie tickets or playing short social games, which provide additional social interaction within the chat feature.

Snap’s concentrated approach has clearly contributed to its recovery, but as expectations increase, so will the demands for the company to more aggressively expand its reach. I don’t believe Snapchat needs to acquire a grocery chain or an internet service provider just yet, but working towards identifying its next major platform will prevent the service from limiting its ambitions to the scale of Twitter and provide an opportunity for a more substantial future.

Trends of the Week

The coming weeks will undoubtedly be heavily focused on coverage of the U.S. election, so it’s a good time to take note of the variety of other news stories currently unfolding.

Quibi Ceases Operations
Very few businesses with substantial funding have failed as quickly as Jeffrey Katzenberg’s mobile video platform, Quibi. The company announced this week that it will be discontinuing its services and closing down. Further details can be found here.

TikTok Reinstated in Pakistan
The recent wave of potential TikTok bans across different nations appears to have paused. This week, TikTok was made accessible again in Pakistan, though the government cautioned the company to proactively oversee content or risk another, indefinite prohibition. More information is available here.

Facebook Dating Launches in Europe
Facebook Dating has not significantly challenged Tinder’s position in the United States, and its rollout in Europe was previously delayed due to concerns regarding its data privacy policies. Now, Facebook has apparently satisfied regulatory requirements and received approval to introduce the service to several European nations. Read more here.

 

 

Until next week,

Lucas M.