Snapchat’s first quarter decline in growth creates doubt

Phasing out?

Will snaps soon become a thing of the past?

After recently going public, Snapchat shared their growth rate, showing only a slight increase in most markets.

Decline in growth

Snapchat Inc. revealed their growth rate in their first quarter after going public and the data is only slightly impressing for the massive social media app. They reportedly reached 166 million daily users, an increase of 36% from last year but only 5% since last quarter. When measuring their growth rate, Snapchat counts daily active users. They define these as people who have an active Snapchat account and who open the app at least once a day.

Some predict the slow growth due to Snapchat’s narrow demographic.

The app is the most popular among 12-24 year olds, who have been the steady user base that they require. However, this does not provide Snapchat with a lot of room for growth until they start to appeal to an older generation. In addition, connectivity issues have prevented the company from reaching a wider international audience.

During this first quarter, they acquired 3 million more daily users in both North America and Europe respectively.

However, in all other global regions they only added 1 million daily users. CEO Evan Spiegel sites “low bandwidth in the developing market” as the cause behind the minimal reach in the international realm. “It changes the way people use Snapchat,” reveals Spiegel. No one likes to wait for a photo to load, especially when the whole purpose of the platform is to provide instant gratification. In addition, major platforms like Facebook and Instagram essentially copying Snapchat’s main feature isn’t helping. However, Spiegel says the appropriation is the price you pay as a creative company working out of Silicon Valley.

There’s a reason

Snapchat didn’t gain popularity for no reason. They still retain a strong user base that many predict will continue to grow. However, going public has provided full transparency. In their first quarter, they reported a net loss of $2.2 billion, causing shares to plummet.

This does not inspire confidence for shareholders or users alike. Connectivity issues aside, Snapchat’s chances of staying alive will rely heavily on their growing appeal to a wider demographic.

#Snapchat