Snap Inc (NYSE:SNAP) tumbled last week following a tweet from Keeping Up With the Kardashians Kylie Jenner.
sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad.
— Kylie Jenner (@KylieJenner) February 21, 2018
The tweet sparked a one-day, 6% setback for Snap stock just by tweeting, pointing to the ever-weakening usability of the social networking platform.
Observers — and critics of the company in particular — panned Snap and CEO Evan Spiegel for it. They seemed almost gleeful that a reality star’s comment could so easily pull the rug out from underneath the stock. If nothing else, the tweet serves as a curious case study in trading with regards social psychology.
Veteran traders know that such stories are nothing new. If it’s anything like past instances of small news stories influencing stocks, the selloff will be wiped away and forgotten soon enough.
In this particular case though, the Kylie Jenner tweet is symptom of larger problems for SNAP stock. First and foremost, the company — and its CEO — doesn’t listen to its users.
So even though Kylie Jenner tweeted just eleven minutes later:
still love you tho snap … my first love
— Kylie Jenner (@KylieJenner) February 21, 2018
Snap is still in trouble.
Snapchat’s Unpopular Update
Most readers know that Snap has met some resistance following its recent Snapchat overhaul. In short, users hate it. How do we know? They said as much. More than 1.2 million people tapped into the petitioning power of change.org to officially demand that the company “remove the new Snapchat update.”
To be fair, there were 187 million regular daily users of the platform as of the most recent tally. So only a small sliver of users took the time to digitally sign an online (and absolutely non-binding) petition.
On the other hand, for every person that bothers to spend time signing a petition they know will likely do no good, there are usually many more who feel the same way but don’t bother adding. And there are likely even more users who are less than happy with update but don’t actively want it reverted.
Snap CEO Fumbles Another PR Situation
When a recent initiative incites this kind of pushback, most corporations would listen, and at the very least pay lip-service or offer some sort of PR fluff to placate the complainers. Even if they were only buying time for users to get used to the change.
Not Snap though.
At the Goldman Sachs Internet and Technology conference that took place in mid-February, CEO Evan Spiegel responded to the user pushback by saying that new technologies take time to learn and the complainers needed to be patient:
“The complaints we’re seeing reinforce the philosophy. Even the frustrations we’re seeing really validate those changes. It’ll take time for people to adjust, but for me, using it for a couple months, I feel way more attached to the service.”
His point is well taken, though worded poorly. It’s ultimately better to monetize the platform for the long haul than do nothing different and expect a different outcome.
The problem is that if Spiegel truly believes the kinds of frustrations that prompt the creation of a 1.2-million-name petition are a good thing, it shows how little he (and Snap) cares about Snapchat users.
Furthermore, it’s another stunning addition to a list of tone-deaf messages Spiegel has broadcast.
Also on that list are alleged comments like, “this app is only for rich people. I don’t want to expand into poor countries like India and Spain.” And the decision to take a conspicuously expensive honeymoon with his new wife Miranda Kerr while the company was in a shambles.
Let’s also not forget his assessment of the Spectacles debacle, which was ultimately blown off by saying “I guess we made the wrong decision.” That wrong decision — based on not knowing what their users wanted — cost the company $40 million, even though a month earlier Spiegel was singing the praises of the camera/glasses combination.
Reality Check for Owners of Snap Stock
Nobody begrudges Spiegel and Kerr a nice honeymoon. Perhaps it was simply unfortunately timed. Still, for a new CEO that wasn’t exactly off to a great start in terms of being in the public eye, he didn’t do himself any favors.
But far more important, Spiegel doesn’t seem to have learned much. He’s unappreciative of just how big of a deal a change in the company’s core product can be.
To top it off, Jenner is not only a Snapchat user, she’s also a potential advertiser (Jenner runs a cosmetics enterprise) that indirectly told other organizations they might be better off looking toward Twitter Inc (NYSE:TWTR) or Facebook, Inc. (NASDAQ:FB) as advertising mediums.
Snapchat’s redesign is said to be an effort to widen the appeal of the platform to attract even more users, which is a good move on the surface. So far though, it appears to be doing more damage than good.
Yet Spiegel is doubling down on the changes. He’s yet to figure out that business is about giving customers what they actually want rather than telling customers what they should want.
That’s in sharp contrast to efforts made by Twitter and Facebook to listen and respond to their user bases. And eventually, Snapchat users might move toward the platforms that listen.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.
