Snap: The view through rose-colored Spectacles

I’ve always hesitated to write about Snap because I have a good friend who works for the company, and I want to be supportive.

So I’ll bring up some good news about the company. It’s user metrics are growing!

Sort of. Let me explain.

The platform has shrunk in the past few months. Literally shrunk – fewer people using it for less time per day. There’s a lot behind that, including Instagram rolling out Stories, as well as the Snap redesign that was hated by all those tastemakers who matter.

According to Business Insider this week, Snap shares have wiped out $13 billion with a B from its market cap since that tweet. Clearly there’s more to the decline than just Kylie Jenner, but her role is not insignificant.

The (rare) optimistic note from Wall Street

But today, Brian Wieser from Pivotal Research upgraded Snap from hold to buy, saying his data show a “widening user base.” Weiser did acknowledge it is collectively spending less and less time on the platform, but at least its growing, right?

Weiser is one of the few champions of Snap on the Street.  He also said it isn’t too late for management to reverse usage trends and increase monetization. Sure, it’ll take some more platform tweaks (overhauls?) and pulling people’s attention from Instagram, but Snap once held the fire. With a little bit of luck, they can do it again, right?

The company has taken its lumps in the past few weeks. CEO Evan Spiegel sent out a memo that struck a positive tone, giving the stock a quick boost. But that was quickly shot down. BTIG’s Rich Greenfield said the platform is “the fastest way to communicate” 26 times. Clearly not true in our iMessage world.

Users are just posting less too, making it less compelling to open up the app.

Monetization is also an ongoing challenge. Greenfield said the shift to programmatic ads hasn’t been terribly successful.

But the CPMs on Snap are cheap, and as we’ve seen before, maybe advertisers trying to capture the best relative value is the best, winning strategy?

Err, let’s put a lid on that one and stick it back in the closet.

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