Snapchat Cracks Open Its ‘Walled Garden’

Under pressure to grow, the private-messaging app embraces public sharing

Jan. 23, 2018 9:00 a.m. ET

Snapchat, the social-media app distinctive for its intimacy in an era of mass broadcasting, is moving beyond its so-called walled garden.

Starting Tuesday, Snapchat parent Snap Inc. said, some users will be able to share videos and other content they encounter within the app outside the walls, such as through Facebook , Twitter , email and text message.

Snap said the move is intended to build greater awareness and understanding of Snapchat for people who aren’t already users. The company faces scrutiny from investors who are concerned about Snap’s daily user growth, which fell to 2.9% in three months ended Sept. 30, compared with 17% in early 2016.

The new feature is notable because it demonstrates Snap’s willingness to go against the tenets that helped spur the app to early popularity, such as ephemerality, one-on-one messaging and closed social groups.

Traces of this latest move date back to 2014, when Snap started curating content that its users submitted and shared it more broadly on the app. This is the first time, however, that Snap has made content shareable outside the app.

Snap follows other social-media apps that have made it easier to share viral content outside their walls. In 2011, Twitter Inc. allowed tweets to be embedded on other websites. Facebook Inc. did the same with its posts in 2013.

Snapchat users will be able to share content from verified accounts such as Kim Kardashian’s, curated stories—essentially photo and video montages created by users—and videos surfaced in the search bar, the spokeswoman said. The spokeswoman declined to comment on whether users will be able to share stories from publishers.

Only users in some countries where Snap has already rolled out a redesigned version of Snapchat, such as Australia and Canada, will be able to immediately share the content. Snap will roll out the new version of the app to the rest of its users, including in the U.S., over the next few weeks, a spokeswoman said.

Snapchat VP of Product Tom Conrad will disappear from tech

Jan 24, 2018

One of Snap CEO Evan Spiegel’s top lieutenants Tom Conrad will leave Snapchat, and the whole tech industry, in March. Coming roughly two years after he joined the company as VP of Product, a source tipped off TechCrunch to Conrad’s impending departure, which Snap now confirms to us. Snap’s director of growth Jacob Andreou who reported to Conrad will step into his role at an executive level, though no official new title has been assigned to him.

A Pivotal Moment For Snapchat’s Product

Unfortunately, the change could introduce instability at a critical time for Snapchat’s product, as it’s in the middle of rolling out a massive redesign to its app. Snap needs all the product prowess it can get right now to convince users to weather the overhauled interface that was bashed as confusing by users with early access. 83% of the first wave of user reviews of the new app gave it one or two stars, according to data provided to TechCrunch by Sensor Tower.

Though about 20 years older than Snap’s founders, Conrad had proven himself as the CTO of Pandora, building a widely loved and easy-to-use music app. But as Spotify turned algorithmic radio into just a feature of on-demand streaming, Conrad bailed out of Pandora in 2014. He joined Snap’s Venice office as VP of Product in March 2016 according to his LinkedIn. The March 2018 departure date is likely related to Conrad’s vesting schedule that earns him another lump of stock after completing two years with the company.

At Snap, the product design team led by Spiegel rules the company, and he trusted Conrad as one of the few executives given the leeway to push changes Spiegel didn’t agree with, according to Casey Newton at The Verge. “He keeps a pulse on the spokes, and is a shadow for Evan. He extends Evan’s view when Evan’s not in the room” a source told Newton.

While some execs have reportedly butted heads with Spiegel, him and Conrad had a smoother relationship. “Getting to collaborate with Evan has been one of the highlights of my career” Conrad told TechCrunch. His departure could make Spiegel even more of a bottleneck for design decisions at a time when Snapchat’s trying to evolve amidst stern competition from fast-moving Facebook subsidiary Instagram.

It All Comes Down To Evan

Snap has endured a brutal few months. The share price hovers around $14.50, about half its peak after a disappointing Q3 where it lost $443 million, revenue fell short, and user growth slowed to a crawl. Talent is trickling out, like TimeHop’s Jonathan Wegener, SVP of engineering Tim Sehn, early employee Chloe Drimal, and VP of HR and Legal Robyn Thomas have all left since July. It also laid off two dozen content curation staffers.

Meanwhile, plans for new products like the redesign and Stories outside the app leaked. So did an extensive set of usage data for all its features showing that growth of Story sharing is flat. That was followed by an aggressive letter to employees threatening termination or legal action for leaking to the press…which immediately leaked to the press. It all paints of picture of low morale and dissatisfaction, leading to confidential info pouring out of the purposefully secretive company.

Unfortunately the weak momentum and sagging share price could make it tough to recruit a top talented to replace Conrad officially or fill Andreou’s role. That same situation could stunt Snap’s ability to make star acquisitions, which it’s used to fuel some of its top features like Bitmoji and augmented reality selfie lenses.

Twitter Is Working on a Snapchat-Style Video Sharing Tool

January 25, 2018

Twitter Inc. is working on a new Snapchat-style feature that makes it easier to post videos on the social-media company’s app, according to people familiar with the matter, aiming to attract more users and cement a nascent turnaround.

The San Francisco-based company has a working demo of the camera-centered product, according to people who have seen it, but the design hasn’t been finalized, nor has the timing of its debut. The tool could change significantly over the next several months, they said, asking not to be identified because the product hasn’t been publicly disclosed. The goal of the new feature is to entice people to share video clips of what’s happening around them. Twitter declined to comment.

Social-media leader Facebook Inc. has famously copied innovations from Snap Inc.’s Snapchat, a mobile app focused on ephemeral photos and videos that’s popular with younger audiences. Twitter’s latest change suggests that Chief Executive Officer Jack Dorsey is taking cues from the newer company as well. Dorsey in the past has praised Snapchat, calling the app "very modern" and admitting that Twitter can be "confusing." The Snapchat app opens first to a camera. With just a swipe, users can see photo and video messages from friends or content from media partners.

The new product targets the relatively cumbersome process of sharing videos or photos on Twitter, whose social network lets people post real-time updates of up to 280 characters and follow others’ feeds. Now, users have to open the Twitter app, click the compose button, find the camera button, take the video or picture, then click on the tweet button. The goal of this product is to reduce the number of steps.

Twitter shares gained as much as 1.4 percent early Thursday. Snap fell as much as 5.1 percent amid concern about further competition for the features that once made its app unique.

Snap earnings: Snapchat redesign is a ghost amid Facebook concerns

Feb 6, 2018 7:27 a.m. ET

When Snap reports earnings Tuesday after the markets close, most Snapchat users will still be waiting for its redesigned app announced three months ago after a few quarters of research and development costs. Snap initially launched the redesign among a small group of test users and said it was set to roll out widely in “coming weeks,” but has not issued an update in the interim and did not respond to requests for updates this week.

Chief Executive Evan Spiegel offered a blunt but clear reason for the changes to the app, which include splitting friends’ posts and media posts: “The one thing we have heard over the years is that Snapchat is difficult to understand or hard to use,” he said on Snap’s last earnings call in November,

Early reviews have not been stellar. SunTrust Robinson Humphrey analyst Youssef Squali wrote in a Monday note to clients that the new app is being used in the U.K., Australia and Canada, where 83% of reviews are one or two stars. Squali rates the stock a sell with a $10 price target.

Earnings: On average, analysts polled by FactSet model losses of 33 cents a share and adjusted losses of 14 cents a share. Contributors to Estimize, which crowdsources estimates from analysts, fund managers and academics, predict losses of 13 cents a share.

Revenue: For the fourth quarter, analysts predict sales of $252.7 million and Estimize contributors model revenue of $247.82 million. Snap is expected to bank an average of $1.36 per user, with North America accounting for an estimated $198.1 million in fourth-quarter sales. Of the rest, Europe is expected to amount to $32.4 million and the rest of the world accounts for $18 million.

What the analysts are saying

Snapchat needs more users to drive customers to its self-serve ad-buying platform, but analysts’ models show modest single-digit-percentage increases in daily active users into 2018, according to FactSet. Snap posted daily active user growth of 17% during the third quarter, compared with Facebook’s 14%.

“Instagram Stories’ daily active users are now 300 million, which was nearly double Snap’s global daily active users as of the end of Q3,” Wedbush analyst Michael Pachter noted.

Pachter wrote in a note to clients Friday that his team isn’t expecting the redesign to mark some kind of turning point for user growth, which has flattened over time. Worse for Snap is the possibility that the redesign will make life more challenging for Snap’s publisher clients, who currently pay to promote content on the company’s platform.

Pachter wrote that he expects the company’s top line to miss the consensus of near 50% growth compared with the year-earlier period. Pachter said that’s partly due to the company’s shift to programmatic, or self-serve, ad buying, which is similar to tools offered by advertising rivals Alphabet Inc. and Facebook.

The shift to automated buying from manually processing and loading insertion orders into the ad mix has meant declining ad prices. Compared with the year-earlier period, in the third quarter, prices dropped by 60% and Pachter wrote that his team expects a “similar dynamic in Q4.” Pachter has a $9 price target with the equivalent of a hold rating.

Citi downgrades Snap, cuts price target as users lash out over redesign

Feb. 20, 2018

Snapchat users are livid over the app's recent redesign, prompting a barrage of criticism on social media. Wall Street is taking notice and growing concerned over the company's user numbers and financial results.

In a note Tuesday morning, Citigroup warned clients that it downgraded Snap's stock to a sell rating, citing the flood of negative reviews.



"While the recent redesign of its flagship app could produce positive long-term benefits, the significant jump in negative app reviews since the redesign was pushed out a few weeks could result in a decline in users and user engagement, which could negatively impact financial results," wrote Citi's Mark May on Tuesday.

The app's new design is a marked departure from its previous layout and was supposed to make the software easier to navigate. However, many critics on Twitter and Reddit are finding it more unwieldy than before and tailored to advertisers instead of users.

Citi's May also cut his price target on the company to $14, implying 31 percent downside from Friday's close; the analyst sees daily active users growing 18 percent in 2018, matching its year-over-year performance in 2017.

Snap Downgraded To 'Sell' Following 1.2M-Strong Petition To Kill Snapchat App Update

Feb 20, 2018

Citi Research downgraded Snap to "sell" today and offered a target price of $14 for the stock, which is currently near $20.

One of the key reasons? A massively popular user uprising against its latest app update.

An online petition against the most recent Snapchat app update has collected over 1.2 million signatures so far. It's the first time I've seen an app update almost instantly get so many negative reviews that it has materially affected the financial future of its parent company.

In One Tweet, Kylie Jenner Wiped Out $1.3 Billion of Snap's Market Value

February 22, 2018

Snap Inc.’s flagship platform has lost some luster, at least according to one social-media influencer in the Kardashian-Jenner clan.

The Snapchat parent’s shares sank as much as 7.2 percent Thursday, wiping out $1.3 billion in market value, on the heels of a tweet from Kylie Jenner, who said she doesn’t open the app anymore. Whether it’s the demands of her newfound motherhood, or the recent app redesign, the testament drew similar replies from her 24.5 million followers. Wall Street analysts too, have begun to notice, citing recent user engagement trends noticed since the platform’s redesign.

Citigroup analyst Mark May downgraded the stock to sell from neutral earlier this week after seeing a “significant jump” in negative reviews of the app’s redesign. He expects the reviews could cause user engagement to fall, hurting financial results.

Another celebrity sounds off on Snap, and stock hits session lows

Mar. 15, 2018

Shares of Snap plunged as much as 5 percent to session lows on Thursday after Rihanna instructed her 60.9 million Instagram followers to delete the app.

It's the second time in a month an A-lister has done some serious damage to Snap's market capitalization.

Earlier this week, Snapchat users began to notice an ad featuring 30-year-old pop icon Rihanna and her former boyfriend, Chris Brown, for the game, "Would You Rather?" The ad, which asks users to choose between slapping Rihanna or punching Chris Brown, seems to reference — and make light of — the couple's infamously abusive relationship.

Although the app was not produced by Snap, the ad would have had to undergo and pass a review process before publishing.

Several days after screenshots of the controversial ad emerged, Rihanna broke her silence in a story on Snap's rival, Instagram.

"Now SNAPCHAT I know you already know you ain't my fav app out there! But I'm just trying to figure out what the point was with this mess!" she posted.

"This isn't about my personal feelings, cause I don't have much of them … but all the women, children and men that have been victims of [domestic violence] in the past and especially the ones who haven't made it out yet … you let us down! Shame on you. Throw the whole app-oligy away," she added.

Fans began to retweet her message, echoing her sentiment to delete Snapchat.

The company's shares plunged as much as 5 percent, knocking $600 million off the market capitalization. Less than one month ago, Kylie Jenner took to Twitter to express her disdain for Snapchat's confusing redesign. Snap shares fell 7 percent.

Snap issued statements on Monday and Thursday, apologizing that the ad "was reviewed and approved in error."

"This advertisement is disgusting and never should have appeared on our service. We are so sorry we made the terrible mistake of allowing it through our review process. We are investigating how that happened so that we can make sure it never happens again," a Snap spokesperson wrote in an email.

Snap Tries Again With High-Tech Specs

April 26, 2018

On Thursday, Snap started selling the updated version of Spectacles on its website for $150. The new models are intended to be easier to use and more appealing for an audience beyond devoted techies. Among other features, the new Spectacles are waterproof and shoot photos as well as videos of higher quality. The videos can be uploaded to users’ smartphones in a fraction of the time it took with the first version.

Spectacles were released in 2016 and sold in much-hyped vending machines. They became the company’s most visible failure, as Snap misjudged demand and eventually had to take a charge to account for the excess inventory.

The company produced one million units of the first-generation glasses, according to a person familiar with the matter. Snap declined to say how many glasses it produced; Snap says customers bought 220,000.

“We think from a product standpoint, we did a relatively good job with Spectacles,” said Mark Randall, vice president of hardware at Snap, referring to the first-generation sunglasses. “From a planning standpoint, we didn’t do a good job.”

For the new version of Spectacles, Mr. Randall says his team has put in place a more measured marketing plan. Snap will only sell the Spectacles online at Spectacles.com—the artificial scarcity the vending machines created made it hard to forecast demand for the sunglasses, he said. Promotions for the products on Snapchat will focus more on what the glasses can do rather than their fashion appeal.

Snap is also using more mainstream suppliers that require less lead time to produce components for Spectacles and have been able to learn manufacturing lessons from the first version. Mr. Randall declined to offer sales forecasts for the new version of Spectacles.

Selling the public on glasses that record video is something previous companies have failed to achieve. When Alphabet Inc.’s Google attempted to sell augmented-reality glasses for people to wear in public in 2013, it prompted a widespread privacy backlash because users could record video in public places without others noticing. Google stopped selling the glasses to the public in 2015.

Despite the excess-inventory debacle last year, Snap never considered abandoning its sunglasses effort, Mr. Randall said. “We look at hardware as a very long-term strategic investment for the company.”

He described three pillars to Snap’s business—augmented-reality lenses, hardware and the Snapchat messaging app. “We think one day those pillars will collapse, and that’s when it becomes strategically very important for us to retain our leadership position as a camera company,” Mr. Randall said.

Snap Earnings: Will They Be Another Spectacle?

April 26, 2018

The company surprised investors in Q4, leading to a pop in the company’s market value that has almost completely reversed amid, among other things, concerns about job cuts and some high-profile user complaints. Broader questions about potential tech regulation driven by Facebook (FB) controversies likely didn’t help.

Wall Street is looking for a quarterly loss of $0.28 per share, based on FactSet’s mean of 25 earnings estimates. (The company lost $2.31 per share in Q1 2017.) Revenue is seen coming in at $243 million, up more than 60% from last year’s first quarter.

There are some downbeat signs out there. Earlier this week, Raymond James reported on Sensor Tower data suggesting that Snapchat downloads have slowed, with share being lost to Facebook-owned Instagram.

Ultimately, what investors might be most interested in next week might be signals about how the company’s Q1 redesign has affected business. Many users hated it—loudly and publicly—but it was seen as essential to helping move the company toward profitability. If it has, investors may once again cheer the company.

Snap earnings: Spectacles were big money losers, but more are coming

Apr 30, 2018

Snap Inc. is a “camera company”—or so it proclaims in its Securities and Exchange Commission filings. But by most financial measures, its first piece of camera hardware was an unmitigated flop.

Version two of Snap’s connected glasses, called Spectacles, launched on Thursday, ahead of its first-quarter earnings set for release Tuesday after the bell. But the first version may have cost the company hundreds of millions in losses.

In the fourth quarter of 2018, Snap logged a $40 million write down from its unsold hardware, and the company lost about $22 million on the 220,000 it did sell since its launch on Nov. 10, 2016. That amounts to about 4.4 million each quarter, which doesn’t include the company’s research and development spending, which crossed $100 million in the December quarter as it has grown since the company went public last year.

The per-unit losses resulted because each $130 Spectacles unit the company sold resulted in a loss of about $100, according to Cheddar, which could make Snap’s hardware unit responsible for a significant chunk of its $350 million in fourth-quarter net losses.

Earnings: On average, analysts polled by FactSet project losses of 29 cents a share and adjusted losses of 17 cents a share. Contributors to Estimize predict losses of 15 cents a share.

Revenue: For the first quarter, analysts estimate sales of $243 million and Estimize contributors predict revenue of $256.7 million. Snap is expected to bank $1.27 on average per active user, and grow its daily active user count to 193.93 million. North America is the most valuable region for the company and users there are expected to be worth $2.30 on average in the first quarter, according to FactSet.

What else to look for

With Snap’s flagship Snapchat app rolling out a redesign in January, which separated the user content from that which was generated by publishers and celebrities, analysts are watching closely for the effects on earnings and sales. The new version of the app generated backlash from users that did slow downloads during the quarter to some extent, Wedbush analyst Michael Pachter wrote in a note to clients Friday.

It’s possible the new design drove more sales, however. Pachter wrote, “In early tests, management noted that the redesign resulted in higher ad performance in terms of both view time and engagement.” Pachter rates the stock a hold with a $12.50 price target.

Snap Shares Tumble as Results Disappoint

May 1, 2018

Snap Inc. on Tuesday said revenue rose 54% in the first quarter from a year ago, but that missed analyst estimates and fell nearly 20% short of the previous quarter as efforts to wrest a larger share of advertisers’ budgets were impeded by Facebook Inc. and Alphabet Inc.’s Google.

A recent redesign of the company’s Snapchat app apparently failed to reignite the app’s slowing user growth.

The $230.7 million in revenue that Snap recorded missed the forecast of $243 million from analysts polled by FactSet. Advertisers typically spend more in the fourth quarter than the first quarter because of holiday ramp-ups in November and December, but analysts have said it is unusual for a company’s revenue to be so seasonal early in its life as a public company.

“Pretty disappointing,” said Youssef Squali, an analyst with SunTrust Robinson Humphrey Inc. He had expected Snap to do better in the quarter because advertisers typically spend more money during the Olympics, which took place in February. “They missed on virtually every metric,” he added.

Snapchat added about 4 million daily users during the first quarter, bringing its total user base to 191 million. Analysts surveyed by FactSet expected Snap to add 7 million daily users.

Snap had launched a redesign of its Snapchat social-media app in February that was aimed at broadening its business beyond its core audience of teens and young adults. The first-quarter results offer the first look at how the redesign affected Snapchat’s growth.

“A change this big to existing behavior comes with some disruption,” Snap Chief Executive Evan Spiegel said Tuesday.

The new version of the app elicited mixed reviews. In the weeks after the rollout hit most phones, more than 1.2 million Snapchat users signed a petition to roll back the revamp.

The number of daily users on Snapchat was lower in March, after the redesign rolled out, Mr. Spiegel said, adding that it was above the number of daily users Snap had in the fourth quarter. Snapchat users still used the app for more than 30 minutes a day on average following the redesign, Mr. Spiegel said.

“Advertisers are actively looking to diversify their digital investments from the two biggest players,” said Jim Cridlin, global head of innovation at WPP PLC’s Mindshare unit, referring to Google and Facebook. “But on Snap, the users just aren’t there.”

Mr. Spiegel defended the redesign. Now that public-facing content and personal posts on the app are separated, friends don’t have to compete with professional creators, he said. And retention for new, older users has increased.

Research firm eMarketer expects Snap’s share of the digital advertising market to grow to 0.7% this year, well below the 48.9% of global digital advertising revenue that eMarketer expects Facebook and Google to control in 2018. Facebook’s revenue rose nearly 50% in the first quarter to $11.97 billion, and advertising revenue for Alphabet Inc.’s Google jumped 24% to $26.6 billion in the same period.

Snap has struggled to manage expectations as a publicly traded company. In each of its first three quarters as a publicly traded company, Snap missed Wall Street’s revenue expectations, and shares plunged following each report. In the fourth quarter, however, Snap exceeded Wall Street’s forecasts.

Snap Chief Financial Officer Drew Vollero to Step Down

Longtime Amazon executive Tim Stone will become financial chief next week

May 7, 2018

Snap Inc. Chief Financial Officer Drew Vollero is stepping down, leaving the social-media company that has struggled since he helped take it public last year, the company said in a securities filing.

Mr. Vollero has decided to pursue other opportunities, a spokesman for Snap said. Mr. Vollero’s last day as CFO is set to be May 15.

Snap’s shares are hovering near an all-time low. The redesign of the company’s flagship Snapchat app has failed to reignite growth for the company, and Snap has struggled to take a bigger piece of the budget advertisers spend on Facebook Inc. and Alphabet Inc.’s Google. Mr. Vollero joined Snap’s finance team nearly three years ago when it was only five people and running on Quickbooks, according to a spokesman for Snap.

Tim Stone, vice president of finance at Amazon.com Inc., will take over starting May 16, the filing said. He joined Amazon in 1998, and has led the integration of the Whole Foods acquisition.

Mr. Vollero will remain as an adviser to help with the transition until Aug. 15.

Snap has lost a number of high-profile executives in the past year, including its head of sales Jeff Lucas in February, senior vice president of engineering Tim Sehn in November and general counsel Chris Handman in July.

Snap stock rises after Citron makes bullish call

May 31, 2018

Shares of Snap Inc. are up 5.4% in Thursday trading after Citron Research announced that it now had a long position in the stock.

"The most heavily shorted social media site offers a compelling opportunity for investors as even no news is good news," the Citron team wrote in a report. "Staying short a stock where negative catalysts and news flow are baked in is a recipe for disaster that is often coupled with an inability to look past the headlines."

The team at Citron wrote that ad impressions are up, the company has avoided the sorts of privacy scandals that plagued Facebook Inc. and Twitter Inc. and Snap's stock is trading at a discount to internet peers. Citron initiated coverage of Snap with a $17 price target.