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Did Snapchat Really Lose One Billion In Stock Value After Kylie Jenner Tweet?

(Los Angeles, CA) –  Kylie Jenner may be the reason Snapchat lost over one billion dollars in stock value. The fall in Snap Inc. shares occurred after the reality TV star tweeted out this week that she doesn’t use the app as much as she did in the past.

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The confession comes on the heels of backlash Snapchat has received over its latest update, with some people arguing that it has made the app harder to use. Jenner is reportedly the most-watched person on the platform. But Vox got to the core of the decline and apparently Snapchat has been struggling for awhile now.

Snapchat was floundering before the update

Snapchat has had an uneven fiscal year — mainly because of Instagram. Instagram has directly targeted Snapchat’s predominantly teen user base by mirroring several of its features, most notably by creating Instagram Stories, a feature of Instagram that is extremely similar to Snapchat Stories and now boasts more users than Snapchat’s entire user base.

Snapchat went public in March 2017 despite warning investors that it might never turn a profit. Then it saw a decline in new users — a trend broadly attributable to the belief held by many that people were using Instagram Stories instead.

By August 2017, predictions loomed that Facebook, which owns Instagram, would ultimately put Snapchat out of business. Then Snapchat suffered three quarters in a row where profits were lower than expected, followed by year-end predictions of ongoing financial gloom.

Snapchat’s final quarter earnings last year were actually better than expected for the first time ever, and the company’s stock was up 25 percent. But that’s partly because investors were reacting with optimism to the redesign — which users turned out to despise.

So all these factors, exacerbated by the groundswell of user outrage throughout the start of 2018, were probably what investors were thinking about when they read Jenner’s tweet. Those who sold their shares probably weren’t reacting specifically to Jenner talking about her Snapchat habits, or worried that she might singlehandedly devalue the app. Instead, they probably saw the tweet as the cap-off to a trend of overall decline.

 

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