According to a survey by the Pew Research Center, 78% of 18-24-year-olds use Snapchat, with 71% visiting the platform multiple times per day. It has been proven that a brand which attracts consumers in the formative years of life is more likely to retain those customers in the future. This bodes well for SNAP, as these young adults will grow into higher income consumers throughout their lives, and are likely to continue to prefer the social media outlet over its competitors.
Still, contrast Snapchat’s DAUs with users of Instagram, and it is clear that Snapchat has the opportunity to grow in size. Instagram Stories, the product most similar to Snapchat, has 400 million DAUs, more than doubling Snapchat’s last reported number. If Snapchat can capture some of the time users spend on Instagram it is likely to boost its revenue and profitability.
For this reason, Snapchat has been hard at work producing new features for its product, attempting to woo over new adolescent users who already spend significant time on social media applications. This includes Snapchat Charms, a means of helping users build relationships on the platform, and Lens Challenges where users can engage in viral challenges. The company hopes these initiatives help bring new users to its platform in the coming year.
Weakness, or Perceived Weakness?
With a strong customer base and recent earnings which have exceeded expectations, SNAP is poised to climb higher. The question remains, has SNAP’s business stabilized enough to see it exceed its IPO share price in the coming year?
