{"id":12274,"date":"2017-06-08T10:59:50","date_gmt":"2017-06-08T14:59:50","guid":{"rendered":"http:\/\/www.mathewingram.com\/work\/?p=12274"},"modified":"2017-06-08T10:59:50","modified_gmt":"2017-06-08T14:59:50","slug":"snap-investors-should-be-very-worried-about-this-number","status":"publish","type":"post","link":"https:\/\/mathewingram.com\/work\/2017\/06\/08\/snap-investors-should-be-very-worried-about-this-number\/","title":{"rendered":"Snap Investors Should be Very Worried About This Number"},"content":{"rendered":"

When Snap went public in March, in one of the most eagerly anticipated tech IPOs in recent memory, some analysts expressed concern about a slowdown in the growth of its Snapchat messaging app. Now, a new number suggests those concerns may have been well founded.<\/p>\n

In a note to Nomura Instinet’s invesment clients on Wednesday, Snap analyst Anthony DiClemente said that statistics<\/a> from SensorTower\u2014a company that tracks the popularity of mobile apps\u2014shows that downloads of Snapchat have fallen by 22% in the last two months.<\/p>\n

Downloads on Apple’s iOS platform have been even worse, the company found\u2014they declined by more than 40% in the first two months of the second quarter.<\/p>\n

By comparison, downloads of Facebook-owned Instagram have shown year-over-year growth, DiClemente pointed out in his note, “suggesting that competitive pressures may be intensifying for Snap, challenging the platform’s ability to attract and retain new users.”<\/p>\n

The analyst has a “reduce” rating on the stock and a $14 price target, and said he has lowered both his revenue and profit estimates for this year and next year.<\/p>\n

Snap’s stock [fortune-stock symbol=”SNAP”] traded as high as $27 after it went public, giving the company a market value of $18 billion, but it has fallen sharply since. Its share price dropped by another 6% on Thursday to trade in the $18 range, not far from its IPO price of $17.<\/p>\n

In its first quarterly report as a public company last month, Snap said that it lost<\/a> over $2 billion, primarily as a result of equity grants to executives like CEO Evan Spiegel.<\/p>\n

Much of the pressure on Snap’s shares stems from concerns that Instagram is eating into the company’s user growth, and taking away advertisers as well.<\/p>\n

Instagram added a feature called<\/a> Stories earlier this year, which allows users to add multiple photos and videos to create a collection with a specific theme. The feature is essentially a carbon copy of a Snapchat feature with the same name.<\/p>\n

Instagram said earlier this year that more than 200 million people use its Stories feature, which is more than Snapchat’s entire user base.<\/p>\n

Snap and its defenders, however, argue that Snapchat functions differently from Instagram because it is much more focused on sharing among individuals, whereas Instagram has more of a public broadcast model, in which users track how many likes and comments they get.<\/p>\n

According to a recent survey by<\/a> App Annie, another app analytics company, about 35% of Snapchat\u2019s daily users in the U.S. aren\u2019t on Facebook the same day they use the app, and more than 45% can\u2019t be found on Instagram on the same day they use Snapchat.<\/p>\n

The risk for Snap, is that while Snapchat’s model may be more appealing to users, Instagram’s model may actually turn out to be more interesting to advertisers.<\/p>\n

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When Snap went public in March, in one of the most eagerly anticipated tech IPOs in recent memory, some analysts expressed concern about a slowdown in the growth of its Snapchat messaging app. Now, a new number suggests those concerns may have been well founded. In a note to Nomura Instinet’s invesment clients on Wednesday, … <\/p>\n

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