Snap can’t avoid same fate as Facebook and Twitter

Snap can’t avoid same fate as Facebook and Twitter

Getty Images In recent quarters, social media companies have been able to capitalize on each other’s weaknesses. Facebook Inc., for one, benefited as it transferred Snap Inc.’s key features to a broader audience, and Twitter Inc. was helped by Facebook’s decision to cut down on viral content. On this competitive front, however, there appeared to be no real winners in the second quarter. “Now through all of social’s earnings, we highlight the trend of all three platforms having troubles on the user side,” Jefferies analyst Brent Thill wrote following Snap’s SNAP, -6.78% latest earnings report. That said, analysts are still concerned about user trends. “For Snap, we wonder if it can recover from the UI redesign and lure users back to the platform,” wrote Thill, who rates the stock at hold with a $14 price target. Snap Inc. Others shared Thill’s concerns. “While the company is continuing to work to address this issue, and we did not receive explicit guidance around user growth, management reminded investors that 3Q is typically seasonally weak with respect to user trends,” wrote Evercore ISI analyst Anthony DiClemente, who has an underperform rating and $9 price target on Snap’s stock. “We see some growth challenges and view the valuation as excessive,” Kessler wrote in lowering his price target to $10 from $11. “The MAU disclosure (Snap’s first as a public company) suggests a DAU/MAU ratio in the mid-70% range across the U.S. & Canada, which is nearly on par with Facebook’s (likely) industry-leading 76-77% daily engagement in this region,” Egbert wrote.

The government wants Facebook to let you mass delete all your cringe teen posts
Five Social Media Mistakes that Can Kill Your Apparel Brand
Apple, Google, Microsoft, Amazon And Facebook Own Huge Market Shares = Technology Oligarchy
Snap could be suffering from “social fatigue,” an analyst suggested Wednesday morning.

In recent quarters, social media companies have been able to capitalize on each other’s weaknesses. Facebook Inc., for one, benefited as it transferred Snap Inc.’s key features to a broader audience, and Twitter Inc. was helped by Facebook’s decision to cut down on viral content.

On this competitive front, however, there appeared to be no real winners in the second quarter.

“Now through all of social’s earnings, we highlight the trend of all three platforms having troubles on the user side,” Jefferies analyst Brent Thill wrote following Snap’s SNAP, -6.78% latest earnings report. “We wonder if this trend is social fatigue, or just short-term noise as safety, security and privacy are top of mind.”

Snap surprised investors on Tuesday afternoon when it posted its first-ever sequential decline in daily active users, which Chief Executive Evan Spiegel attributed to “disruption caused by our redesign.” On Snap’s earnings call, Spiegel tried to highlight a number of more positive points stemming from the redesign, including improved retention of older users and better viewership of publisher content.

That said, analysts are still concerned about user trends. “For Snap, we wonder if it can recover from the UI redesign and lure users back to the platform,” wrote Thill, who rates the stock at hold with a $14 price target.

Executives from Twitter TWTR, -2.54% and Facebook FB, +0.75% also said in conjunction with their latest earnings reports that user trends were hurt by changes meant to improve the overall experience on these platforms.

Opinion: The biggest problem for Facebook and Netflix is they are running out of humans

Snap shares fell as much as 8.2% in morning trading Wednesday. They were volatile after the results came out,…

Pin It on Pinterest

Shares
Share This