Mobile Applications

Snap's Stocks Take A Hit From Unpopular Redesign

Snap’s first-quarter sales fell short of analysts’ projections after its redesign, as shares fell as much as 19 percent in late trading.

According to Bloomberg, daily active users on the Snapchat mobile app numbered 191 million in the period, missing the 194.3 million average analyst estimate. Revenue was $230.7 million, below predictions for $244.9 million.

Earlier this year, Snap launched a redesign of its mobile app, which allows users to share pictures and videos that disappear. It wasn't met with much enthusiasm from its core users, who even started an online petition to get the company to remove the update.

“There is a general level of annoyance among users and many have decided to use a VPN app, or are using other risky apps or steps, to go back to the old Snapchat, as that’s how annoying this new update has become,” the petition read.

And, of course, there was the infamous tweet from Kylie Jenner: “sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad.”

Snap said it will continue tweaking the design, but the complaints caused a downshift in advertising, even as Snap started an automated ad sales system. In fact, the company revealed in late March it was laying off around 100 employees in order to focus on advertising.

“Snap is going through a painful maturation phase,” said Daniel Ives, an analyst at GBH Insights. Wall Street was looking for “further red flags around the company’s much-discussed app redesign,” he said.

The company also warned investors that revenue gains in the current period will "decelerate substantially" from the first quarter, indicating that growth will be far less than the 62 percent analysts expected on average.

“A change this big to existing behavior comes with some disruption,” CEO Evan Spiegel said of the app’s new design. He added that "we are already starting to see early signs of stabilization” among iPhone users, but the company still has much to do to make it work for Android users.



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