Snapchat will have 77.5 million monthly US users this year, a 2.8% decline from a year earlier, says industry analyst EMarketer. The research firm pointed toward dissatisfaction with a redesign of the app. It predicts user growth will level off next year.
However, Snap said the methodology of the forecast was flawed.
“The report does not factor in recent developments such as our revamped Android app.”
It said the forecast was more than 10 million off from Snap’s “publicly available reach on our ad buying tool, its thesis is focused on the app redesign from over one year ago, and its methodology draws on self-reported survey data that’s unreliable in our core 13 to 34 year-old demographic”.
Last year, the company suffered from executive turnover and reaction to the redesign. Facebook’s photo-sharing app, Instagram, also unveiled features that mimicked those of Snapchat, luring away users, EMarketer said.
Snap’s shares plummeted 70% by late December from its 2017 IPO price, as investors became sceptical the company could improve its financial results and grow amid competition.
“Many users didn’t like how Stories and chats were mixed together in a confusing redesign that went into effect in late 2017 and was broadly available by early 2018,” EMarketer forecasting analyst Showmik Podder said. “The backlash was so severe that Snapchat was forced to scale back some of the changes just a few months later.”
Snap reported last month that daily active users - its user metric - were unchanged in the fourth quarter of last year from the previous quarter.
Interim chief financial officer Lara Sweet said Snap did not foresee a sequential decline in daily active users.
EMarketer’s forecast might dampen Wall Street’s recent optimism that Snap is back on the right track. Shares have more than doubled this year, bringing the company’s market capitalisation to more than $16 billion (R223bn).
Snap also announced an expanded advertising network, improved augmented reality and camera features, a new video-game service and original shows.
- Bloomberg / The Washington Post