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This Is Snapchat’s Biggest Problem

May 11, 2017 4:59 AM
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Shortly after Snap’s (snap) recent IPO, I warned about the uphill battle it would face to generate revenue along with its vulnerability to imitation. On Wednesday, the company released its first post-IPO earnings report. It didn’t go well. Growth in daily users and revenues both missed expectations, and the stock was down more than 20% in after-hours trading. There are few indications that the future will bring better news, since Snapchat’s main problem is differentiation, and that is not likely to change.

In its early days, Snapchat was refreshingly simple and fun—a picture-messaging platform for friends to stay in touch with other friends, and an energizing change from dated and preachy Facebook (fb) and impersonal Instagram. It soon added playful elements like lenses and filters, which increased it...

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