Snapchat sees $1.7 billion drop in value after Kylie Jenner tweet
Yes, you read that title correctly. A tweet sent out by Kylie Jenner caused devastating issues for Snapchat, as they saw their market cap drop by $1.7 billion. In the tweet, she said “sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad.” While the tweet seems fairly innocent at heart, it stems from the widespread disapproval of a recent redesign, that many users are calling downright terrible. Kylie Jenner has over 24.5 million followers on Twitter, and she is one of the many celebrities who utilize the social media platform for business and promotional purposes.
Earlier this week, Citigroup downgraded the sell rating of Snap Inc. stock, citing the redesign as the main reason for doing so. In November, Snap CEO Evan Spiegel told investors that a redesign of the wildly popular social media platform was due for a total overhaul redesign. He promised that it would come with a more user-friendly design, but since rolling it out, users are less than enthused. On Change.org, there has been a petition created to rollback the design, giving users the pre-2018 update that was preferred. Over a million people have since signed the petition, in hopes that it would grab the attention of Spiegel. To no avail, Spiegel has defended his company’s decision to keep the update, saying he feels more connected than ever with the app.
Once a staple of every person’s social media arsenal, Snapchat is now struggling to continue to keep up with changing trends in our everyday use. Nowadays, the main use of Snapchat has been emulated by bigger social media apps, including Instagram and Facebook. Instagram introduced their story feature in 2016, and it has since grown to include many new features that put it on par with Snapchat. Facebook is also entering the foray, with their stories becoming more utilized with its billion plus users. Snapchat has since been forced to innovate with their product in order to compete with these newcomers, but it’s been reported that Snapchat users are steadily falling, and the company seems to be taking countless losses.
Gina Sanchez, CEO of Chantico Global, has said that the design problem is certainly getting in the way of Snapchat making a comeback. She told Trading Nation, “I’ve always been skeptical of Snap because I think it’s very difficult for them to monetize. Obviously what Kylie Jenner was reacting to was the redesign of the app, which makes it easier or at least makes it possible for Snap to try and monetize the business.”
Snapchat is currently on a slippery slope, in a position where they are effectively alienating their core demographic of users, being 18-24 year olds. With the widespread disapproval of the redesign, analysts are saying that Snapchat will be forced to branch out to appeal to an older demographic. Sanchez said, “I think it’s going to be challenging because they’re going to have to move into an older group and I’m not sure that’s going to work. I think that’s a risk.”