I have been a bear on Snap Inc (NYSE:SNAP) stock for a long time.
Ever since its IPO, I’ve argued that SNAP stock was dramatically overvalued based on the notion that Facebook Inc (NASDAQ:FB) could successfully play the copy-cat game and thwart Snap’s growth. Essentially, whatever Snap could do, Facebook could do better — and with significantly more reach.
This bear thesis has played out perfectly so far. Facebook launched Instagram Stories, a near verbatim replica of Snapchat Stories. That platform took off. Snapchat’s user growth went sideways. All in all, its only been a year, and Instagram Stories is already nearly 50% larger than Snapchat Stories.
FB stock went up. SNAP stock went down.
But even as a very vocal and outspoken Snap bear, I admit that this self-labeled camera company may be onto something with its latest “Context Cards” feature.
Context Cards & Social Recommendations
Snap’s new Context Cards plunges the company into the world of social recommendations.
The feature itself is pretty simple. When scrolling through snaps, you can now swipe up on certain snaps to get the context of that snap.
For example, say your friend posts a snap of himself or herself eating dinner at a restaurant. You think the restaurant looks cool and are interested in going. You can swipe up on that snap and get the restaurant’s name, location, website, menu, phone number, reviews and more.
Its a simple change that has profound implications. Snapchat wants to be more like a search engine, but instead of searching with text, you discover things by scrolling through images and videos of your friends and family. In this sense, Context Cards is an attempt to turn Snap into a visual search engine with curated friend and family content.
This is a pretty big idea that could yield pretty big results.
The Problem With Context Cards
But Stories was also a pretty big idea. It yielded pretty big results… and then Instagram copied the feature and Snapchat’s core feature turned into a commodity.
Why couldn’t the same thing happen here?
It very well could.
Firstly, Context Cards isn’t guaranteed to be successful. I like the idea and see it as a powerful tool for visual-based search, but that doesn’t mean it will be used heavily by Snap’s users.
Secondly, if Context Cards is hugely successful, you can bet that Facebook will quickly roll out a very similar product on both its platform and on Instagram. It really isn’t a hard feature to replicate (you just need content and data, which Facebook has plenty of).
Plus, Facebook has a tremendous size advantage. Facebook and Instagram have more user data, more content and more reach than Snap.
Consequently, the Facebook ecosystem is naturally levered to be a more robust social recommendations and visual marketing platform than Snap.