Snapchat is Betting on its Spotlight Feature $SNAP

Snapchat investors should be very happy with the stock's performance in the last year and a half. Shares fell below $10 at the onset of lockdown and are currently trading above $62.

LikeFolio data doesn't paint such a rosy picture.

SNAP user growth mentions (download, signing up) have dropped -50% since 2019. Noting this captures English-speaking mentions and isn't indicative of international growth. Regardless, this kind of stall in the U.S. isn't great news.

Competition is mounting. On the messaging/close friends side of things, Instagram Stories happiness is 12 points higher vs. Snapchat (66% positive vs. 54% positive). On the entertainment side of things, TikTok user growth mentions have increased more than 340% vs. 2019 --- a stark shift vs. Snapchat numbers.

TikTok boasts more active users than Snapchat: 732 million vs. 528 million. You can see TikTok overtake Snapchat on the user growth chart below at the onset of the pandemic. In addition, TikTok's happiness is 5 points higher vs. Snapchat (59% positive).

Every other social site pales in comparison to the monster that is FB. 4/5 of the largest social apps fall under this monster's umbrella (Facebook, What's App, Facebook Messenger, Instagram).

What is Snapchat's plan?

Long-term it is investing in Augmented Reality: "Snapchatters engaging daily with our augmented reality Lenses grew more than 40% year-over-year in Q1, outpacing our daily active user growth by more than 80% as people interact more with augmented reality on Snapchat." This is a fancy way of saying people like filters. The company is eyeing potential shopping applications. We'll see...

Snapchat is responding to TikTok's entertaining format with "Spotlight". It rolled out a discover tab for brands and products, but our data showed this wasn't sticking. After releasing the Spotlight tab, we are seeing some traction here in 2021.

According to SNAP's last earnings call, daily video submissions increased +40% from January to March, while the number of viewers watching Spotlight for at least 10 minutes per day grew by over 70%.

Snapchat releases 21Q2 earnings July 22 after the bell.