I tend to be bearish on $SNAP in general, but I'm interested in the discussion. How do they right the ship and boost back up to that $25-30 range? What's their play?
Good luck to the team though. It must be a stressful time there.
Is it really a big expertise now? I think it was a big deal when they started those face filters but now even small players have that stuff. For example, hike: https://play.google.com/store/apps/details?id=com.bsb.hike
And in order to become a compelling brand advertising platform they need massive reach (i.e. at least a billion users).
How can they restart user growth? Well, that's probably going to be pretty hard at this point. I suspect they'll need to broaden their appeal from their initial teens/college/just-out-of-college user base to an older and more diverse crowd (just like Facebook and Instagram did). That will probably require some UI redesign to make things a bit more intuitive to navigate, and perhaps other feature changes that make it a more attractive destination.
However, I think it's basically all but impossible for them to restart the growth engine at this point. A lot of people have heard of Snapchat, tried it, and decided they don't like or just don't see the point when they already use Instagram.
Making matters worse is the fact that their initial market is incredibly hard to hold on to. Things almost never stay super popular across multiple "generations" of high school and college kids (except for default utilities that everyone at every age uses). In other words, it's unlikely that Snapchat will be popular with high school and college kids in five years.
So, I suspect that as their metrics stagnate and decline over the next few years they will increasingly focus on a series of moonshot new product ideas (like Specs) and hope that something sticks. But there's little reason to suspect that they'll be any better at building a random new product than any other start-up or big company out there (and, in fact, I'd argue there are some good reasons to think they'll be worse).
As is probably pretty obvious, I'm quite bearish on Snap these days. I was extremely bullish a year and a half ago, but they've just been so slow to execute when it mattered. They lost their wave of growth. At this point, I'd be surprised if they can catch another.
From what I can see, there are three reasons why they are in a worse position to create a new, successful product than any other startup or big company.
1. They are already pretty big and successful. It's extremely hard for companies to really shift focus unless they're truly desperate. Opportunities that are great in the long term usually seem painfully small, or impossibly distant, in the short term, and it's hard to attract and motivate talent internally to these projects.
2. They seem overly confident. This is annecdotal, but they do seem to have a culture that breeds and rewards a bit of cockiness. That doesn't bode well for them rewarding people who push a humbler view of the company and empathize deeply with new kinds of users.
3. Their grand vision isn't very good, and that likely reveals a deeper lack of understanding about life and human nature. From what I understand, their guiding mission is roughly to help people share experiences in real time and more or less live in the moment. The thing is, most people don't want to share all that much of their lives with many people - most people want to escape their own lives most of the time. And for those who do want to share, there are many different more or less equally good ways to do it. Snapchat's core functionality is easily comoditized. There's no benefit to scale for Snap's users, given the company's vision. Yet they don't seem to realize that or care. And that's a critical mistake. It doesn't exactly build confidence in their ability to execute.
That said, the fact that they see themselves as a camera company does bode well. I suspect we will be a much more camera-centric culture in five or twenty years than most people think. And their playfulness is a great way to overcome the creepiness of cameras. They may end up in the right place at the right time to ride that wave.
That being said, I'm bearish on Snapchat, at least in the short term. I don't see much opportunity for growth, not unless it manages to capture the hearts and minds of the next budding wave of teens.
Maybe I wasn't clear. From what I can tell Snap is focused on connecting people in the moment. It's more about giving people a way to share the little adventures of their day with close friends than it is about giving people a way to share a few big events in their week, or giving people a way to broadcast their lives to a mass audience of strangers (they have this functionality but de-emphasize the use case). Facebook and Instagram are more about sharing fewer but bigger moments - though they work okay for sharing more and smaller if that's what you want - they're one of the many good enough options.
I agree with your point about the next wave of teens. And I suspect that will be tricky. That said, maybe if it never catches on with the olds it'll be easier to stay popular? Maybe they can just own the teen chatting niche?
But those should be easy enough to copy. And I find the content thing weird, it feels bolted on to an app you use to talk to friends. I am bearish on them, I think it was smart to IPO when they did.
And even if they did all of that well, is that worth $25-30 per share?
Another story on HN shows what developers are doing with Apple's ARkit, and it's more impressive than anything I've seen from Snapchat.
Now everything novel they had (expiring message, stories, filters) has been successfully aped by Facebook and incorporated into Instagram, and because Instagram offers a UX that isn't intentionally shitty, they've already shot past the Snap userbase.
Sell your stock now, and don't be surprised if they're irrelevant/bankrupt by 2019.
- Positive revenue growth numbers, not flat or negative
- New features launched and positively accepted in the market