Commentary

Has Snapchat's Popularity Peaked?

Are investors starting to see Snapchat more as a fad than a startup with the chops to evolve and grow over time? 

Well, the social darling did just raise another $175 million at a valuation of $16 billion -- unchanged since its last capital infusion last May.

Sure, market conditions and other factors can impact these valuations, but the latest one most likely signals declining confidence in the company’s outlook.

What’s wrong with Snapchat? Among other issues, there are early signs that the app maker is struggling with mass-marketing adoption.

During the Oscars, for example, Snapchat let everyone view a stream of live snaps from its Web site. The social powerhouse had never before broadcast a Live Story beyond the borders of its mobile app. Clearly a bid for more visibility, the move threatened to diminish Snapchat’s cool factor among young users.

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The company is also struggling to come up with a scalable ad strategy. Why else would it hire Sriram Krishnan, who most recently ran Facebook’s ad network?

Speaking of Facebook, the social giant seems to have Snapchat and other video-streaming service in its sights. While it only began testing live video-streaming late last year, Facebook has been hastily rolling out the feature, and just began tweaking its algorithm so that live videos are more likely to appear in users’ News Feeds.

Meanwhile, Snapchat has been struggling to find traction with various growth initiatives.

For example, it recently pressed pause on its original content efforts, shelving Snap Channel. It also disbanded the 15-person team behind the quasi-content-studio.

Even more recently, Snapchat decided to close its Lens store. Lenses are still widely available on the service, but Snapchat just stopped charging a 99-cent fee to buy them.

On the bright side, Snapchat is still reportedly clocking 6 billion video views a day, which represents a 300% increase since May. Those numbers aren’t far off from the 8 billion daily video views that Facebook presently sees across mobile and desktop.

That, and a $16 billion valuation, ain’t bad.

1 comment about "Has Snapchat's Popularity Peaked?".
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  1. Leonard Zachary from T___n__, March 8, 2016 at 12:50 p.m.

    any data points on "Use of Proceeds" for the $175M ??? quarterly payroll maybe???

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