It’s bad news for Snapchat on Tuesday as it failed to add new users despite new COVID-19 lockdowns. The social media company had seen a spike in its users due to the pandemic. As COVID-19 forced millions of people to stay home, more people flocked to social media for diversions.
Snapchat Breaks Its Winning Streak
However, CNN reports that Snapchat couldn’t maintain its streak. Snap, Snapchat’s parent company, saw its stock drop by 10% Tuesday. They had expected millions of new users to continue coming in, but their numbers slowed down. Derek Andersen noted that the surge tapered off quicker than expected. Andersen is Snap’s chief financial officer.
Snapchat’s spike in users from coronavirus lockdowns has begun to taper off, despite a pause in reopening across many states forcing people to continue staying home https://t.co/43DY7t5bU6
— CNN Business (@CNNBusiness) July 22, 2020
At the height of the pandemic, Snap saw 238 million daily active users. These numbers marked a 17% increase in users from the same period in 2019. However, this year’s figures fell short of their expected 239 million in April. Snap had also notched slower growth than the previous quarter’s 20%.
How Did Snapchat’s User Numbers Fall Off?
COVID-19 disrupted advertising, which makes up much of Snap’s revenue. Marketers cut their ad spending because the pandemic cut off businesses. Andersen also noted that some advertisers decided to “rework” their strategies under COVID-19.
Can Snapchat Bounce Back?
Snap got back up from this setback by adding more ads on “e-commerce, streaming, and gaming.” Their ad revenue grew by 17% and added up to $454 million. However, it still fell short of the $462 million earned last year. The company had enjoyed revenue growth of 44%.
With COVID-19 causing a shakeup in the social media market, Snap could still make moves to bounce back.
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