Farhad’s and Mike’s and Nellie’s Week in Tech: Struggles for Snap

Nellie: Hello, boys.

Farhad: Great. O.K., here goes. So, let’s start with Snap. Remember Snap? It made an app that teenagers really loved. They loved it so much people thought it would be the next Facebook. But yeah, no, that didn’t happen. This week Snap’s stock price plummeted after Morgan Stanley, the bank that led the company’s recent I.P.O., issued a report downgrading the company’s shares. Now Snap is trading under $17, its I.P.O. price.

Mike: Talk about a knife in the back. Has Brian Nowak, the Morgan Stanley analyst who wrote the report, not heard of Snapchat’s viral dancing hot dog? Billion-dollar idea right there.

Farhad: What’s ailing Snap? Facebook, obviously. The social giant has copied basically all of Snapchat’s best features. Instagram, also owned by Facebook, seems to have kneecapped Snapchat’s growth. Also, advertisers don’t seem to be warming to Snap’s platform.

What can they do? Is Snap done?

Mike: I don’t think it’s fair to count them out entirely. Snapchat still has a lot of highly engaged users who love the product, and the company is moving into augmented reality, via the aforementioned Mr. Hotdog.

Nellie: People seem to have overestimated how loyal kids are to apps and how impactful stunts like Spectacles are. But mostly I think Snap out-cooled itself. They designed the app to be explained by word-of-mouth, so olds like me couldn’t use it very easily. The only snap I’ve snapped was me asking if I was snapping. That said, it’s worrisome how fast Facebook consumed this company, its last real social competition. And it’s a reminder that we may still be seeing only the beginning of Facebook’s reign.

Mike: Honestly, I feel it’s an issue of expectations. The bankers compared Snap to Facebook during the I.P.O. roadshow. But it’s nowhere near the scale of Facebook, nor will it ever be. That was what Twitter’s bankers did during its I.P.O., and look how well that…

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