Snap Inc (NYSE: SNAP) stock has taken quite a beating in the market in the past couple of weeks following negative reviews of its app update by some high-profile Snapchat users. Snap stock is down more that 10 percent since celebrity Kylie Jenner blasted the update on Twitter, but the latest Snapchat usage data suggests things may not be as bad as they seem for Snap investors.
Jenner, who is one of Snapchat’s most influential users, voiced her disappointment in the Snapchat redesign on Twitter on Feb. 21.
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“Sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad,” Jenner wrote.
The tweet has gotten more than 372,000 likes and 75,500 retweets. Jenner is clearly not alone in her frustration with the redesign. More than 1.2 million people have signed a Change.org petition to remove the new Snapchat update.
Fortunately for Snap investors, while users have certainly complained about the update, Stifel’s social media usage tracker indicates Snapchat’s audience reach dropped by only about 0.1 percent in February. Contrary to the wave of negative media coverage the redesign has gotten, analyst John Egbert says Snap seems to have lost only about 90,000 of its 187 million global daily active users in February.
“Considering the significance of the [user interface] changes in Snap’s redesigned app, the minor reach disruption through February seems relatively minor in comparison to the media coverage of the event, although it’s worth noting the disruption in engagement could impact DAU figures more than the monthly reach estimates reported in Snap’s ad platform,” Egbert says.
Even after the app update blowback, Stifel estimates Snap will add 2.5 million net daily active users in the first quarter of 2018. Egbert says he will be watching March usage tracker data for more clarity on the long-term impact of the update.
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In the meantime, Stifel remains cautious when it comes to Snap stock.
“Snap’s ad business has developed more slowly out of the gate than initially expected as the shift to the auction model caused ad pricing headwinds and advertiser demand lagged Street expectations,” Egbert says.
Stifel has a “hold” rating and $17 price target for SNAP stock.
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Snap Inc Update Isn’t Driving Away Snapchat Users originally appeared on usnews.com
