Snap shares hit an all-time low at 22% closing at $11.03 shedding 21.9% from its earlier close of $14.13. The Snapchat message app’s company even warned its investors that there is a possibility that the revenue growth of the company would decelerate substantially in the coming quarter mostly because of weaker ad revenue.
The first quarter numbers of the company were discouraging which showed that the users and advertisers are losing their confidence in the company mostly due to the negative feedback for the widely-panned Snapchat’s redesign. The first change was introduced in November last year and was followed by more updates in the design of Snapchat which were not particularly welcomed by the users.
Users Slam Redesigned Version Of Snapchat
Snapchat is an extremely popular messaging app known for its ghost logo and disappearing messages. But right now the company behind the app is facing the wrath of its users who believe that the changes introduced in the app’s design in the last few months were all unnecessary as they have made it difficult for them to use the platform. Around 1.2 million users have signed a petition on change.org urging the company to delete the update.
Apart from the redesign issue, the ad prices of Snapchat also suffered a drop of 65% in its overall year-wise performance for the first quarter after it replaced its original direct sales method with an automated “programmatic” auction-based system. The prices of Story ads of Snapchat remain unaffected by all these changes.
Company Faces More Challenges Ahead
According to analysts, Snap should gear up to face more challenges ahead as the unsuccessful redesign is not going to be the only pain. Anthony DiClemente of Evercore said that the redesign has created lots of challenges for the company which it would find very difficult to overcome. The company’s app is also facing increasing pressure from lookalike features of Facebook, Inc. Common Stock (NASDAQ:FB) and Instagram.
The new change separates the paid content from the user content and has severely affected the ad revenue of the company. But the users began to lose their confidence after the petition got a huge response with the results taking down around $4 billion of the company’s value which now amounts to around $23 billion.