Over the course of the year, Snap went public, and 2017 became all about its ability to prove its worth after a pricey IPO. Unfortunately for Snap, things didn’t turn out as well as last year. Its stock tanked. Instagram stole all its best and most recognizable features. The company’s head of HR was outed as deeply problematic, and, by the end of the year, the company unveiled its redesign as a last ditch effort to scrounge up ad revenue.
Let’s break down the year a bit more, particularly the most recent bad events. Following its third quarter earnings report — the last one we currently have — Snap’s share price dropped over 15 percent in after-hours trading. The company missed investors’ expectations both in terms of revenue and user growth. To be fair, the company said it grew its daily active users by 17 percent year over year, up to 178 million. Snap’s trying and succeeding in growing modestly, but put next to the behemoths that are Facebook and Instagram, the company isn’t faring well. In comparison, Instagram has 300 million active story users.
Snap lost $40 million in 300,000 pairs of unsold Spectacles
Around the time of that same earnings report, The Information reported that sales of Spectacles — the company’s first foray into hardware — had slumped. Hundreds of thousands of units reportedly sit in a warehouse because the demand is no longer there. The company lost $40 million to those 300,000 pairs of unsold, connected glasses.
Meanwhile, the company did launch new tech features for Snapchat, including the intriguing Snap Map, which lets users share their location with friends. Instagram and Facebook don’t have a similar feature (yet), so it’s unique. But many people freaked out when it was released, especially because Snap’s main selling point is that it’s the social platform for teens. Parents probably don’t want their kids broadcasting where they are, down to their exact corner, and teens might not have been aware of the privacy implications and risks. The company clarified that it was opt-in only and that people can turn it off. It weathered the controversy, and now, we barely ever hear about Snap Map.
Augmented reality continued to be a push for the company, too. Snap publicly launched its Lens Studio, which gives creators the tools to create AR world lenses. That means a lot more brands can use the platform with their own lenses, but it’s also possible that regular users will try to make their own. The idea is for Snap to become the preferred place to launch an AR lens as augmented reality becomes more commonplace. Still, the company faces lots of competition on this front. Facebook opened its AR platform up to developers in December, and both Google and Apple have their own mobile AR platforms in ARCore and ARKit, respectively.
Snap also said it’s going to start paying creators, similar to how YouTube incentivizes people to create videos in exchange for ad revenue. Over 2018, CEO Evan Spiegel says Snapchat will build out additional distribution and monetization options, which could get influencers to use the platform. All this is to say, Snap took many hits this year on various bets to make Snapchat more marketer-friendly than ever. While it didn’t suffer the fake news / ads problems like its competitors did, next year will be a test on whether it can retain the fun and youthful appeal as its reputation as a public company grows up.
Don’t feel too bad, Snap. Sure, your stockholders probably aren’t thrilled you have thousands of pairs of Spectacles sitting in a warehouse, or that Instagram continues to pillage your app features, but we all want to forget 2017 anyway. You’ve got your redesigned app that you’re hoping will grow your user base and encourage more social interactions. That’s promising! At the very least, people still love the dancing hot dog.
Final grade: C-
The Verge 2017 report card: Snap
- Introduced a redesigned app
- Still grew users, though growth has weakened
- Launched Lens Studio
- Needs many more users
- What features won't Instagram steal?
- Hardware has dramatically flopped