Can Snap’s Latest Update Turn Things Around?
Snap Inc. (NYSE:SNAP) has started to roll out a new version of its app that attempts to fix many of the user interface issues that plagued the major redesign the company unveiled late last year. The update will be important for Snap, as its prior redesign not go down well with its core user base, impacting user growth while contributing to several celebrity defections from its platform. During Q1, the first full quarter following the launch of the big redesign, Snap added just about 1 million daily average users (DAUs) in North America, its slowest pace in several quarters, while its Europe and Rest of the world segments together added about 3 million users. Moreover, the company’s DAU metric actually declined in March, falling below its quarterly average of 191 million subscribers.
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With the new version of the app, the company will move Stories from the Friends screen to the page to the right of the main Camera screen, making them easier for users to access. Moreover, Snaps and Chats will be ordered chronologically on the Friends page, rather than being organized algorithmically. This could help to make the app more familiar, ensuring that Snap doesn’t alienate its older and more engaged users, who are likely to be more valuable to the company from an ARPU perspective. With that said, the company still faces mounting competitive pressure from Facebook’s photo-sharing app Instagram. Instagram has been making deeper inroads into Snap’s core functionality, allowing developers to create more AR tools such as face filters, which were popularized by Snap. Instagram’s Stories feature alone eclipsed Snap’s total user base last year, and the app has also been gaining traction in international markets, where Facebook is more deeply entrenched.
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While Snap still has some work to do to boost its user growth and engagement, this step seems to be a good start. It remains to be seen how effective the redesign will be to that end, but we will be watching its key metrics closely in the coming months.
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