Why Snap’s New Search Tool Could Be A Big Deal

+15.30%
Upside
11.48
Market
13.24
Trefis
SNAP: Snap logo
SNAP
Snap

Snap Inc. (NYSE:SNAP) recently announced that it would add a new search function to Snapchat, allowing users to search though Stories that are shared with the public. The feature could help Snap improve its engagement – and in turn, monetization levels – while adding a new dimension to the app’s typical friends and followers model, making a lot of additional content easily accessible to users.

Trefis has a $17 price estimate for Snap, which is around 25% below the current market price.

See Our Full Model And Analysis For Snap Here

Relevant Articles
  1. Up 6% In The Last Trading Session, Where Is Snap Stock Headed?
  2. Beating S&P500 By 62% Since The Start Of 2023, How Will Snap Stock Trend After Q4 Results?
  3. Up 91% YTD, What’s Next For Snap Stock?
  4. Is Snap Stock Attractive At The Current Levels?
  5. What To Expect From Snap Stock?
  6. Snap Stock Is Fairly Valued

Snap’s search functionality has been typically limited to searching within a user’s friends list or searching for new accounts to follow. Users typically view Snaps and stories of people they follow, as well as content from Snapchat Discover, which is compiled by editors. However, the new search feature will search and index stories that users have submitted to the app’s Our Stories section. Snap will use machine learning tools that scan various elements of a story, including the text, time and visuals, and group stories by a theme.

Search could help to enhance Snap’s appeal, beyond being a platform for engaging with friends and followers to a broader real-time social network. This should help Snapchat increase engagement, as users will have a plethora of content to get drawn into via search indexing. The move could, to an extent, set Snapchat up against Google’s YouTube platform, with more casual, yet current content that is shorter. The real-time aspect of search could also allow Snap to compete with Twitter as a platform for real-time events, in a richer and more engaging format. Moreover, photos and videos that are submitted to the Our Stories section may be exempt from Snap’s typical 24 hour time-limit, according to TechCrunch. The search feature should also allow Snap to take on Facebook, which is increasingly moving into Snap’s turf with features such as Stories and digital stickers.

With Snap’s user growth slowing down last quarter amid competition from Facebook and saturation in the lucrative North American market, Snap may have to count on user engagement and ARPU growth to justify its valuation going forward. Features such as Search could serve to do just that, adding another dimension to Snap’s already engaging platform. The move could also potentially open up new advertising revenue opportunities. While Snap will not be placing advertisements in search results at first, it is likely that the company will eventually place sponsored stories in the search results, much like other search engines. Snap could also leverage’ users search histories to improve ad targeting on the app. Overall, a search function makes a lot of sense from a user experience standpoint, and should also help drive revenues in the long run.

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap U.S. Mid & Small Cap European Large & Mid Cap

More Trefis Research