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ยท Posted on
February 21, 2024

An internal revenue memo at Snap didn't self-destruct after 10 seconds and now the company's share price has been smashed

Oh Snap... things are about to get tricky at the Snapchat owner.

What's the key learning?

  • Social media platforms are competing for advertising dollars in unfavourable conditions.
  • Apple's 2021 privacy changes have exacerbated the issue.

๐Ÿ‘‰ Background: Snapchat launched back in 2011 as an app where people could send sneaky pics that would self-destruct. It grew to deliver the first stories feature and the first live filters.

๐Ÿ‘‰ ย What happened: Snap Inc.'s CEO and founder released a memo saying Snap won't hit its revenue targets this quarter and the pace of hiring will need to slow... Nek minnit, its share price was smashed by 31% - ouch ๐Ÿค•.

๐Ÿ‘‰ What else: Snap signalled that Apple's privacy changes last year have really started to hit the company's advertising revenue.

๐Ÿ”” What's the key learning?

๐Ÿ’ก Social media platforms are competing for ad dollars at a very challenging time. A shaky economy and a war in Eastern Europe are factors affecting Snap's revenue, but those things will hopefully come to an end at some stage.

๐Ÿ’กOn the other hand, Apple's privacy changes look to be permanent. Recap: Apple now allows users to decide if they want to be tracked or not by third-party applications like Snap or Meta... And most users said no ๐Ÿ™….

๐Ÿ’กNow, Snap can't target advertising to its users with the same precision. Since Snap generated 99% of its revenue from ads in 2021, its targeting is clearly a key part of its arsenal. Buuut without it, Snap needs to think of creative new ways to generate revenue.

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