Snap Inc (NYSE:SNAP) is seemingly taking a big risk. On Thursday, Snap rolled out Snap Kit, a developer kit that allows users to log in to other apps via its platform. That, of course, also allows third-party developers access to the data of Snapchat users.

At first glance, Snap Inc seems to be taking a huge risk. After all, third-party developers, most notably consulting firm Cambridge Analytica, have put Facebook, Inc. (NASDAQ:FB) in hot water with politicians and regulators. And Snap has been notably critical of Facebook, with CEO Evan Spiegel taking swipes at his company’s larger rival when Snapchat launched its redesign back in February.

But Snap’s measured efforts are in noted opposition to Facebook’s aggressive policies. Indeed, as Mashable put it, “Snap Kit is clearly trying to position itself as a kind of anti-Facebook.” The issue for SNAP stock, however, is that there’s little reason to believe that Snap Kit — or anything else — will fix its core problem.

Snap Kit

Snap Kit encompasses a number of products:

• Creative Kit allows outside developers to create stickers and filters for Snapchat.
• Login Kit allows Snapchat users to use their credentials to login elsewhere.
• Bitmoji Kit puts Snap bitmojis into keyboards of other apps.
• Story Kit means developers can embed Snapchat Stories into apps and websites.

Many of the features echo those long offered by Facebook. But Snap is trying to differentiate itself with a clear focus on privacy. App connections are ended after 90 days. Logins consist only of the Snap display name and bitmoji –the latter by user choice.

Third-party developers accessing Snap Kit have to be verified and approved by Snap Inc staffers. Personal data won’t be shared, and Snap Inc itself won’t use the data gathered from partnerships in targeted advertising.

The goal here is clear. Snap wants to expand the reach of its platform to third parties — while also promising privacy to its users. It’s a fine line to walk.

Does the News Change the Outlook for Snap Inc?

The problem is that Snap Kit doesn’t seem to materially change Snap’s positioning. Admittedly, SNAP stock has gained 30%+ from late May lows. But those lows represented an all-time low for the stock, and a current price near $14 still sits below the stock’s IPO price.

First-quarter earnings showed continued weakness in user increases, with the figure up just 2% quarter over quarter. On the Q1 conference call, Spiegel admitted that the redesign was “creating some apprehension among our advertising partners,” undercutting the other pillar of revenue growth.

Snap Inc likely hopes that Snap Kit will help growth, but it’s far from certain that will be the case. The focus on privacy likely limits advertisers’ access to some of the data they want most. There’s a reason why Facebook and Alphabet Inc (NASDAQ:GOOGL)(NASDAQ:GOOG) are dominating online advertising growth.

And on the user side, it’s not clear that users see privacy as a differentiator — even if they should. Facebook already seems to have recovered from its bad publicity in Q1, at least if FB stock (and Q1 results) are any guide. If Snap thought there was some massive base of users to be captured from Facebook amid the scandals, they appear to be wrong. And so the company’s hopes of challenging the social media giant look close to dashed — with or without Snap Kit.

SNAP Stock Still Is Too Expensive

Without that user growth, the problem remains: As I’ve argued for some time, SNAP stock is just too expensive. Near-term losses aren’t necessarily fatal to the bull case. Just look at Netflix, Inc. (NASDAQ:NFLX) and Tesla Inc (NASDAQ:TSLA), both of whom have negative free cash flow at the moment. Indeed, Snap Inc should be unprofitable. It should be investing in growing its user base and building out relationships with advertisers.

The problem is that the improvement on both fronts isn’t nearly enough to support what remains a 9x forward revenue multiple. The explosive returns at Twitter Inc (NYSE:TWTR) over the past few months show that there is room in the social media space for more than just Facebook — but maybe not room for three major players.

That’s certainly the case if Snap Inc doesn’t improve its execution. And while Snap Kit appears well-intentioned, it’s hardly enough to materially change the outlook for SNAP stock.

As of this writing, Vince Martin has no positions in any securities mentioned.