Snapchat has become one of the most common apps for social interaction online. This popular app offers features allowing users to call, video chat, or message one another and has grown to be a global company. Users do not spend any money in the app and installing it onto devices is free meaning this: Snapchat depends almost completely on advertisement space. However, although Snapchat’s usage has grown, in the most recent quarter, the company has lost money.  

Toward the end of their first quarter in 2018, they gained an estimated 4 million new users. Despite this increase in potential consumers, their stock value decreased during by 15 percent. During the fourth and final quarter of 2017, their profit per user was around $1.50, with $286 million in total revenue. In the most recent quarter, this average dropped to $1.21 per user, making it $231 million in revenue.

This decrease in profits seems to have stemmed from a recent update of the app, which was an attempt to make users more involved in features like Bitmoji, or customizable avatars. However, the update received extremely negative reviews and the backlash from users led to the creation of multiple petitions for the app to revert back to the original interface. Snapchat CEO Evan Speigel expects this negative response from users to bleed into the second quarter, resulting in a further decline of revenue. Despite this, he has not mentioned replacing the update to appease users.

One of the main markets Speigel planned to target was the Android user. Development for Snapchat on Androids was not as polished as it was on iOS and market research has shown that Android users responded positively to updates improving performance with the app. If Snap plans to continue in investing development teams into the Android market, it could be the ticket out of its current crisis.

Investors are rightfully worried about Snap’s performance in recent months. Although the platform continues to grow, the attempts made by the company to branch out have clearly fallen flat. The most notable example of this is the plan to add tech merchandise to the company like the Snapchat Spectacles. These sunglasses with cameras on the ends that could send pictures directly to your account lost the company almost $40 million in unsold products. Snapchat executives have made no mention of reviving these projects.