The Industry

Snapchat Is Still Hurting From Its Really Unpopular Redesign

Snap's shares sunk 20 percent after reporting earnings that fell well under expectations.
Snap’s shares sunk 20 percent after reporting earnings that fell well under expectations. Christophe Simon/AFP/Getty Images

Snap’s disappointing earnings call on Tuesday is yet another sign that the redesign of its platform is a dud. The company reported a revenue of $230.7 million, falling short of the $244.9 million analysts expected, and a daily active users count of 191 million, far below analyst predictions of 194.3 million. To make matters worse, CFO Drew Vollero forecasted that Snap’s growth rate in the next quarter will “decelerate substantially” from Q1.

The social media company’s executives framed the lamentable numbers as a temporary snag due to the redesign and as the result of a “seasonally tough quarter.” CEO Evan Spiegel said, “As we have mentioned on our past two earnings calls, a change this big to existing behavior comes with some disruption, especially given the high frequency of daily engagement of our community.” This explanation does not seem to have comforted investors. Snap shares fell by 20 percent on Wednesday.

Snapchat began its initial rollout of major changes in November, partly with the aim of making the platform more intuitive for older users. The most significant component of the redesign was to move tools for personal interactions, namely chats and stories, to one half of the app, and news and brand content to the other. This shift incited outcry from Snapchat’s existing user base of junior millennials and Gen Z’ers, leading to an anti-update change.org petition that currently has over 1.2 million signees and an exasperated tweet from one of the platform’s biggest influencers, Kylie Jenner, that caused shares to tank by 6.1 percent in February.

Chrissy Teigen also voiced her displeasure:

Recode reported last week that Snap is now testing a redesign of its redesign, which essentially rolls back one of its more controversial changes by placing Stories back alongside the brand and news content on the Discover page.

Beyond the redesign, it will be worth keeping an eye on Snap’s performance issues with its app on Android phones, which Spiegel admitted was still a “weakness” during the call, along with the growing popularity of competitors like WhatsApp Status and Instagram Stories.