Tencent buys 12 percent stake in Snap

Nov 09, 2017, 00:54
Tencent buys 12 percent stake in Snap

Snap's average revenue per user rose to $1.17 in the latest quarter, from 84 cents a year earlier, but missed analysts average estimate of $1.30.

The company admitted yesterday that Snapchat, its image messaging and multimedia mobile app, is not as user-friendly as it could be, and as a result the company has made a decision to do a major redesign, which may be a hindrance of growth in the short-term, but the company foresees it will be beneficial in the long-run.

The company posted a net loss of $443.2m for the third quarter, with shares down 20% in pre-market trading on Wednesday morning. Analysts on average were expecting revenue of US$236.9 million. The Company offers three ways for people to make Snaps: the Snapchat application, Publishers Tools that help its partners to create Publisher Stories, and Spectacles, its sunglasses that make Snaps.

"One thing that we have heard over the years is that Snapchat is difficult to understand or hard to use, and our team has been working on responding to this feedback", Spiegel said in prepared remarks released by the company.

He said that there was a "strong likelihood" the redesign would be disruptive in the short term, but that Snap was willing to take the risk for long-term gain.

Snapchat said the changes would make the application easier to navigate and increase its compatibility with Android devices to address its struggles attracting new users and turning a profit.

Snap announced on Tuesday plans to redesign its core product, Snapchat. This may be hinting at the possibility that Snapchat might adopt an algorithmic feed. Users will eventually have their own Stories experience using machine learning, but "without compromising the editorial integrity of the Stories platform", Spiegel wrote.

Most importantly, the Android version of the app will receive a major redesign, which Spiegel says will be built "from the ground up", according to Android Authority.

The company acknowledged on Twitter that "some" users were having trouble using the app around 3:30 PM Eastern on Monday and said in a later tweet that a fix was being worked on.

Tencent was also at one point rumored to be one of the companies interested in acquiring the Snapchat as part of its wider global ambitions, and specifically to expand more into the US market.