What sort of influence does a celebrity have over a social media network? How about $1.3 billion?
Snapchat is one of the most used social media apps today, especially by under 30 users. If you don’t use Snapchat, it’s basically a social network that allows the users to message with photos, videos and texting on pictures. One of the biggest features of Snapchat is that the photos self-destruct automatically. Snapchat stories features allow users to create a show of news deed where posts, photos and videos can be viewed for 24 hours.
On March 2017, less than a year ago Snapchat (SNAP) became the latest Social Media juggernaut to become a publicly traded company. Snap priced its public open at $17 a share and they quickly increased and ended the day up 41.s% at $24 per share (Balakrishnan, 2017).
First year of Snap stock price
Kylie Jenner’s Snapchat Stories are the most viewed interactions on the Snapchat network. Over 3 million Snapchat users follow Kylie Jenner stories in real time. Snapchat makes revenue through serving up advertisements on these stories, so the traffic is a substantial part of the income revenue model for the business. On Wednesday February 21st Jenner tweeted out that she was fed up with Snapchat. Snap ended up losing 6% on Thursday, wiping about 1.3 billion off the company’s market value (Yurieff, 2018). While celebrity status can influence platform, it’s likely not the only contributing factor to the downturn in Snap. The company has lost money for three straight quarters, competitor Instagram has launched similar features, and the platform has been losing users since going public (Romano, 2018). The writing was on the wall for Snap from an investment standpoint, Jenner’s tweet was just the cherry on top so to speak.
Some may look at this as a blip on the radar. Does anyone remember the uproar when Facebook decided to launch a separate app for chatting? Some thought this would be the downfall of Facebook, only the company has consistently gained market value ever since. Jim Carry recently sold his stakes in Facebook and urged users to delete their accounts over the lack of intervention on the part of Facebook in the Russian election scandals, but does his celebrity status really have an impact in the business? Time will tell if Snapchat can survive with or without Kylie Jenner or if they simply need to better understand the wants and needs of their users.
References:
Balakrishnan, A. (2017, March 07). Snap closes up 44% after rollicking IPO. Retrieved February 25, 2018, from https://www.cnbc.com/2017/03/02/snapchat-snap-open-trading-price-stock-ipo-first-day.html
Yurieff, K. (2018, February 23). Snapchat stock loses $1.3 billion after Kylie Jenner tweet. Retrieved February 25, 2018, from http://money.cnn.com/2018/02/22/technology/snapchat-update-kylie-jenner/index.html
Romano, A. (2018, February 23). Did Kylie Jenner cause Snapchat to lose more than $1 billion in a day? Probably not. Retrieved February 25, 2018, from https://www.vox.com/culture/2018/2/23/17044428/kylie-jenner-snapchat-tweet