Get ready for Snapchat to look completely different

Snapchat may not look like this soon.
Image: snapchat

Snap really isn’t looking so hot to Wall Street, and so they’re making some radical changes. 

“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. As a result, we are currently redesigning our application to make it easier to use,” Snap CEO Evan Spiegel said in a statement Tuesday. 

Snap stock fell more than 20 percent in after-hours trading after the company announced yet another disappointing quarterly earnings. Snap missed analysts expectations on revenue and daily active user growth, the two most important metrics for Wall Street. 

Snap reported revenues of $207.9 million, missing analyst expectations of $236.9 million. The app now has 178 million daily active users, only a slight bump from 173 million the prior quarter. 

While some Snapchat obsessed people have donned a dancing hot dog costume on Halloween, the company’s core advertising business and user growth is continuing to struggle.

A redesign is just one of many major changes to come. Spiegel admitted his company mistakenly neglected building for Android and supporting creators. 

Spiegel admitted his company mistakenly neglected building for Android and supporting creators. 

Over the last year, Spiegel has required executives and employees to use Android devices and has tasked more engineers with building for the app. Since April, the average time to start the Android app has dropped by more than 20 percent.

Snap will also begin paying creators and building more products for them. Snap is already gifting more creators with emojis, the official distinction for verification on the app, and is experimenting with a separate “Official Stories” section of the app. This change comes after many creators have posted less on Snapchat and have found success with Instagram Stories. 

Over the last three months, Snap has introduced some big updates into its core product app in an effort to inspire more attention from smartphone users. The app’s new context cards show useful information like restaurant reviews and business hours and allow for functionalities like booking an Uber via Snapchat. It’s also prioritized curating Our Stories around breaking news on Snap Maps and on Discover. 

But Snapchat is going to change a lot more. That may shock its young users who are used to the somewhat janky nature of the app. 

“There is a strong likelihood that the redesign of our application will be disruptive to our business in the short term, and we don’t yet know how the behavior of our community will change when they begin to use our updated application. We’re willing to take that risk for what we believe are substantial longterm benefits to our business,” Spiegel’s statement continued. 

Spiegel cautioned on a call with investors Tuesday that it’s not abandoning its focus on Snapchat as a communication app for friends. 

“With the redesign, we found a way to preserve and enhance that friend communication,” Spiegel said. “Our focus is preserving that frequency and intimacy.”

“I think there’s an opportunity for us to create a great personalized content service … that doesn’t diminish the great communication service we’ve created,” he added later. 

Spiegel declined to share when the redesign will be released and what exactly it will include. He did hint that Snap Maps may get more exposure. Currently, Snapchat users must pinch on the main screen to see it. 

The push for radical changes come as Snapchat’s year-over-year user growth has shrunk every quarter. 

Perhaps Snap is taking a cue from Twitter. Jack Dorsey’s social network also has struggled on the public stock market and been criticized by investors for failing to innovate. On Tuesday, Twitter made one of its most radical changes yet by expanding the traditional 140 character count to 280 characters for all users. 

Snap’s attempt at hardware has also disappointed investors. Snap said it lost about $40 million from Spectacles due to excess inventory reserves and cancellation charges for its inventory purchase commitments. Snap sold just over 150,000 pairs of Spectacles and has hundreds of thousands of unsold units, The Information reported last month. 

“Because we were so excited, I guess, we made the wrong decision.”

Spiegel said last month at Vanity Fair Establishment Summit he was happy with the number of Spectacles sold. On the call with investors Tuesday, he admitted to making mistakes. 

“Because we were so excited, I guess, we made the wrong decision,” Spiegel said. “We’re learning from it, and we plan on avoiding making a similar mistakes in the future.”

“Moving forward, we will continue to be in the marketplace for Spectacles and expect modest revenue,” Snap’s Chief Financial Officer Drew Vollero had said earlier. 

Not everything has been bad for Snap. Its advertising business is growing as more brands are using the self-service ad platform. As of Tuesday, more than 80 percent of Snap Ad impressions are delivered programmatically, a bump from 60 percent last quarter.

Snap is still focused on high-quality ads as well. Snap’s augmented reality efforts have grown from more than puppy filters and dancing hot dogs. Snap launched sponsored 3D world lenses so brands can pay for their own viral sensations. 

Snap also has kept itself out of the fake news narrative. While its competitors Facebook, Google, and Twitter testified in Washington for allowing Russian trolls to manipulate the U.S. presidential election, Snap stayed free from the controversy. That’s in part because Snap’s network is smaller and more curated. 

It remains to be seen how curated Snapchat can remain as it tries to appeal to more people.

“We’re not afraid to make changes,” Spiegel said. 

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