Gone In A Snap: Why Snapchat’s Stock Won’t Bounce Back
Snapchat has been in the news a lot lately so I figured I would touch on it. When Facebook, Twitter, and Instagram all came out, I signed up. When MySpace, Snapchat, Vine, Pinterest, and Google+ came out, I didn’t sign up. Granted Facebook, Twitter, and Instagram were all first to market (exception MySpace) so it’s easy to say of course I signed up but let me dig deeper.
Correction, I signed up for MySpace, realized how hard it was to create a cool profile, and then I deleted it. I wasn’t tech savvy enough or maybe had enough interest to really participate. When Pinterest came out, the quick word of mouth branded Pinterest as a women’s social media platform, so I decided not to try it out. I still don’t use Pinterest but I think it’s a very lucrative platform that I will touch upon in another post. When Google+ came out it seemed like it was similar to Facebook and I already had Facebook. I didn’t want to spend the time trying to build up my network all over again. When Vine came out, I wasn’t really interested in creating videos nor did I care for all the random videos on Vine. My friend would show me his vine and I found it annoying personally.
I signed up for Twitter because all of the celebrities and athletes that I care for were using Twitter. It was cool to be able to reach out to them directly with 140 characters. I don’t think Twitter is going anywhere but I’ll touch on that in a different post. I signed up for Instagram because where it’s sort of taboo to post too many photos on Facebook, Instagram is built on photos. I like seeing pictures and video as opposed to someone complaining about their miserable day. Lastly, of course I signed up for Facebook because it was an awesome concept. An easy to use MySpace, where I could keep up with my friends and family, document major events in my life, and go back and relive those events. Sign me up.
Now, we saw what happened to Facebook’s stock after it’s IPO back in 2012. The stock dropped nearly 50% in the first few months following the IPO. Many people seem to point back at this example so as to say that Snapchat’s stock will bounce back just as Facebook’s did. I’m here to tell you that Snapchat is not Facebook. Snapchat could have been purchased by Facebook and made into a profitable company had Snapchat CEO Evan Spiegel seen the writing on the wall. Now we all see what that writing is. Instagram stories. Facebook’s CEO Mark Zuckerberg’s offer to buy Snapchat was declined back in 2013. He created his own version of Snapchat, except that he did it within an already wildly popular social media platform: Instagram. Everything I’m saying right now is what we all already know so besides Instagram stories here is why Snapchat’s bubble has burst.
How many of you use Snapchat? Ok, how many of you over the age of 40 use Snapchat? Ok, and how many of you over the age of 40 that use Snapchat are males? Do you see where I am going? Snapchat doesn’t have the audience or the appeal that Facebook does. How many of our grandmothers or grandfathers are using Snapchat? I can ask the same question but insert Facebook and a significant amount use Facebook. It’s tough for Snapchat to scale because of their target market.
Lets take a look at these statistics from Omnicore (Source). 71% of Snapchat users are under the age of 34. 70% of Snapchat users are female. 45% of total Snapchat users are age 18–24. So if we take a look at the data how do you scale or what advertisers are you wooing over to your platform? Now add the fact that these same users are most likely using Instagram and now Instagram offers the same product within their own platform, wouldn’t you just use that now? The other big take away is how many people who use social media are comfortable taking videos of themselves or others? How many of us take selfies or even video selfies? Snapchat has potential to grow with today’s younger generation because they are more inclined to use Snapchats features. The only problem is that Snapchat doesn’t have the luxury to wait for them to get to a position where advertising to them is profitable for companies. Instagram already caters to a much larger audience and now they’ve taken Snapchat’s niche market as well. It’s only a matter of time before Snapchat is gone, and I believe that time will be much sooner than we think.