Snapchat is not Facebook. They only make two products instead of thousands. They’re fairly privacy conscious, unlike the social media Big Brother. They’re also what you would call “cool” and slightly more fun than, say, an endlessly scrolling barrage of text and pictures.
Simply put, my fourteen-year-old cousin uses Snapchat. She doesn’t even want a Facebook account.
Nonetheless, Facebook is doing everything and anything to replicate Snapchat’s success without outright buying the company. Thanks to their concentrated efforts to render their competitor redundant, Facebook’s Snapchat clone on Instagram (Instagram Stories) now has more users than Snapchat.
Now that Instagram’s Snapchat features are more popular than Snapchat, what does this mean for the newly public Snap Inc.?
Snapchat is losing its purpose.
Snap Inc. has two products: a super-popular mobile app and video-recording glasses. The company is allegedly working on other Snapchat-connected products, but they can’t exist without the Snapchat app. If Instagram Stories continues to grow and Snapchat loses active, ad-viewing users, investors will question Snap Inc.’s existence.
Snap Inc.’s decline is already kind of happening.
The company went public in March (as $SNAP) with an opening price of $24.48. As of today, $SNAP is worth $20.19, or 17.52% less than when it first launched. This is due to numerous factors, from the company’s inability to make a profit and investors’ doubts in the long-term value of Snapchat. Facebook ripping off their best features wholesale is also a major problem.
Instagram Stories lets Facebook eat Snapchat’s lunch.
Facebook, one of the biggest online advertising platforms (if not the biggest), now has a more attractive product than Snapchat. The demographics using Instagram Stories likely aren’t too far off from Snapchat. They also have 200 million active users a day, compared to Snapchat’s 158 million daily active users. This makes advertising on Instagram and Instagram Stories much more appealing to potential advertisers, which would mean more spending on Instagram and less on Snapchat.
Both companies rely on ad spending to survive, but Facebook has a million and one ways to get ad dollars. Snapchat has a few, but sponsored content between their stories is arguably their most important.
Should you invest in Snapchat?
Snapchat’s main business is under direct threat from Facebook. If you think the company will find a way to create something attractive, new, and prevent Facebook from copying them, be sure to research the company more before you decide to possibly invest. If you think Facebook’s win signals the beginning of the end of Snapchat, you probably want to invest elsewhere.