What happened to Snapchat stock? At the end of July 2022, Snapchat (Snap Inc) released its quarterly earnings after the stock market closed. Its stock price immediately tumbled by double digits in the after-hours trading session.
The following day, Snap’s stock was down almost 40% to below $10. This was the lowest point for this stock since late 2018, when it traded at around $5.
Between 2019 and September 2021, Snapchat’s stock price grew more than 1300% to over $83. Despite growing users, the company has difficulty remaining profitable and growing its revenues. We have to remember that Snapchat isn’t only a social media application.
The company has tremendous AR/VR technology. Its lens can identify objects and create the most viral posts online. There is a lot of potential behind the app’s technology. Let’s see what happened to Snapchat in the last decade.
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What Happened to Snapchat Stock: The Story
Since its creation in 2011, Snapchat has been profitable only once, during Q4 2021 (EPS of 0.01), and it surprised everyone. In 2017, Snapchat went public. For almost two years, Snap’s stock slowly descended into penny stock territory.
Competing against other social media giants isn’t an easy task. Facebook even tried to acquire Snapchat, but the latter refused the offer. Facebook ended up buying Instagram and making it everything Snapchat could have become one day.
When the pandemic hit in 2020, many sectors were hit hard. However, social media applications saw a record number of users due to the restrictions. COVID-19 became a blessing for Snapchat. What happened to Snapchat stock?
What Happened to Snapchat Stock During COVID?
During the pandemic, Snapchat saw its daily active users (DAU) grow by more than 20% QoQ. The pandemic also coincided with one very important event, which only began affecting social media applications when users began using their applications less.
Apple made some changes to its mobile operating system. Social media companies like Snapchat had a harder time targeting users with advertisements, collecting data, and monetizing advertisements. Despite a growing DAU, average revenue per user was declining. What happened to Snapchat stock?
The pandemic created unsustainable growth for Snapchat, and the platform couldn’t keep up once the world left their mobile phones to get back to work and socialize in real life. Once restrictions were lifted, Snap’s stock returned to its 2018 price levels.
Snapchat After COVID
The pandemic increased the level of competitiveness across social media platforms. What happened to Snapchat stock? The rise of TikTok and Instagram intensified the battle, and Apple’s roadblock on advertisements didn’t help the company.
On a positive note, DAU keeps growing but at a slower pace. Last quarter, revenues only rose by 13% compared to 38% in the first quarter. The most recent quarter saw a loss of $422M!
That number makes sense when the company spends so much money on R&D. However, pairing this with slower growth began alarming investors. We’re not done yet. No guidance was provided for upcoming quarters. Investors don’t know what to expect in the upcoming quarters. After all this, is there still hope for Snapchat in the future?
Despite the hiccups, Snapchat has potential. Not every company can make $4.1B in yearly revenue. However, 99% of that number comes from advertising sales. The remaining 1% of revenue comes from hardware sales such as spectacles.
Snapchat’s glasses have many filters and augmented reality (AR) features. The application has a lot of potential with its technology. The next item on the list is its international reach. Unlike TikTok and Instagram, Snapchat hasn’t reached as many people around the globe. Two-thirds of its 319M users are from India (115.95M) and the US (106.2M).
Management expected 360M DAU users. Let’s compare those numbers with Instagram. Its total users have surpassed 2 billion.
In comparison, India (230.25M) and the US (159.75) make up less than 20% of Instagram’s total users. For Snapchat, Europe has only 15% of its revenue, including Turkey and Russia. What happened to Snapchat stock? There is a lot of untapped potential there.
Can Snapchat rise from the dead once again? Their technology is similar to Instagram, but users always look for more. They try to find their favorite personalities online, and Instagram has more reach.
It won’t be easy, but if Snap continues to develop the technology behind its app and its partnerships, perhaps it will have a shot. R&D can be a huge factor in their future performance. Otherwise, the company remains an attractive acquisition target. Maybe Amazon or Microsoft? It remains to be seen.
Meta Platforms (Facebook) Update
Facebook was once the leader in the social media business. However, the platform has undergone some changes in the last year. They scared off some investors, and the results impacted the performance of other stocks like Snapchat.
Many investors sold their positions in Snapchat after Meta’s last quarterly earnings releases. What is the reason behind this, and what happened to Snapchat stock?
Facebook used to make billions in ad revenue. They still do, but the pace has certainly changed. First, the platform announced a decline in users for the first time. Next, as I mentioned earlier, Apple made some critical updates that impeded the advertising business.
That cut Meta’s stock price by almost 50% YTD. To maintain its social media giant status, Facebook had to switch its focus to grow and dominate in a different sector.
Artificial Intelligence (AI) And the Metaverse
The big question going forward is how Meta will monetize its business. What happened to Snapchat stock?? From the AI perspective, Facebook has the power of Oculus. Meta is also in the process of acquiring With Unlimited, an AR/VR and tech company.
However, the transaction is being blocked by the Federal Trade Commission (FTC). The government agency argues that Meta can child its technology instead of acquiring an existing company. This will lead to less competition, and the quality of the products won’t be as good.
We won’t have any news until January 1st, 2023. As for the metaverse, Meta is creating a virtual social media platform. For anyone who read or saw Ready Player One, imagine that world. That technology is still far from being at its peak.
Meta is also upgrading its social media platforms (Facebook and Instagram) to match its main competitor, TikTok. The platforms are pushing recommended content over user subscriptions. Many celebrities and users aren’t very happy with these changes. Meta argues that users can find new products and great ideas thanks to their recommendations.
In some ways, Snapchat and Facebook are facing similar challenges. They must keep growing their user base, offer new and original content, and navigate the changing technological world. They both can revolutionize the AR/VR space. There are a lot of exciting times ahead.
Now You Know What Happened to Snapchat and Facebook Stocks
However, the pandemic was a short-term multi-bagger boost for early investors. That period was short-lived since the stock is near its 2018 price levels. In this article, we also had a quick update on Meta Platforms.
Its social media platforms are also struggling with rising competition from TikTok. Both Snapchat and Meta have to focus on their technology to move ahead.
Social media users are always looking for their favorite celebrities and new technology. They have to capitalize on that. Shortly, trading these stocks may be tricky. Thankfully, we can help.
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Frequently Asked Questions
Snapchat is expected to rebound in 2024. With growing revenue, the stock price should also see an increase.
What happened to Snapchat stock? It has a bright future according to many experts are expecting a recovery.
Snapchat is currently rising. If you had bought it at a low, you could sell it for a a profit. Keep an eye on it to see how much growth it has.