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October 30, 2017
Snapchat needs some
good news right now.
Here’s some:
It’s free of fake newsBy Max Chafkin
To get a sense of how rough things are for
Snapchat, consider the Dancing Hot Dog.
In June the disappearing-messages app
began letting users overlay their videos
with a squat-legged cartoon wiener. It
quickly became an internet sensation.
Not that investors cared.
On parent company Snap Inc.’s quar-
terly earnings call in August, Chief
Executive Officer Evan Spiegel boasted
that the break- dancing tube steak had
been seen more than 1.5 billion times on
Snapchat, calling it “likely the world’s
first augmented-reality superstar.” This
goofy glory didn’t do much to soften the
bad news: The company had brought in
less than $200 million in ad revenue and
lost more than $400 million. After Spiegel
answered a question about Snapchat’s
slowing user growth, an analyst, who
apparently didn’t realize his line was
live, said, “I didn’t even understand his
response,” sounding as if he were about
to burst out in laughter. This was before
the 27-year-old CEO said investors should
have faith in Snap’s chances against much
bigger rivals because “we’ve always been
last to market.”
In the runup to its initial public offer-
ing in March, Snap was considered one
of the tech industry’s most promising
unicorns. Now its share price is down
almost 50 percent from a Day-Two peak,
and on Oct. 20 the company said it was
laying off 18 recruiting staffers, signal-
ing that its 2,600 employees are likely to
meet far fewer new co-workers. Analysts
say the problem is the near- monopoly
power of Google and Facebook Inc.,
which together control the most popular
social networks and most of the mobile
ad market. It’s also tough for Snapchat
to add to its 173 million daily users when
Facebook, with a daily audience almost
eight times that size, relentlessly copies
its best features.
For people who expected Snap to be
the next Facebook, its stumbles appear