Sometime in March, Snap was projected to lose $2b while others predicted a $3b loss or more. Despite record highs in the broader market, the social apps stock plunged as low as $12.52 a share.
Meanwhile, its rival, Instagram reported that users under 25 spend more than 32 minutes a day on the app- this is quite a significant success, considering the age group that Snapchat targets.
Snap published a similar data noting that “users younger than 25 visited Snapchat over 20 times and spent over 30 minutes averagely on the app daily”. The reminder of Instagram’s competitive position comes amid a tenuous time for Snap’s stock.
The company’s lock up period is set to expire in no time, allowing early investors to unleash their shares into the market. It is common for share prices to fall during this period as investors wait to see if top executives will sell shares. This was revealed by Jim Strugger, MKM derivatives strategist.
Some analysts have concluded that Snaps profit shortage can be attributed to it’s rival Facebook for imitating series of its features. In retrospect, the embattled tech company recorded only 8m new users during while its rival recorded 59m around the same time as reveals in the last report in May.
This incidence may be a chance for Snap to prove investors wrong in its quarterly earnings report which is set to take place later this month, when wall analysts say “they will look for signs that Snap user growth is accelerating even as Instagram has users hooked”.
“Competition is the single biggest risk for Snap”, said Analyst Mark Mahamay of RBC Capital Markets. He said further:
“It’s a very bad thing to predict. We do like, though, the ongoing innovations that we’re seeing in Snapchat. I thought Snap Maps was one of the more interesting features that we’ve seen in the space for a while. They have to continue to do that and this team seems to have a pretty good track record so far; the stock should work.”
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