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Snapchat Seen Losing Users in the US This Year After Unpopular App Redesign, eMarketer Says

1:58 PM, Apr 10, 2019 — Snap’s (SNAP) shares sank on Wednesday as industry research firm eMarketer projected a decline this year in Snapchat’s monthly US users, with the losses coming as its struggles in the wake of an unpopular redesign of the social-media company’s app.

Snapchat will have 77.5 million monthly US users this year, down 2.8% from last year and well below an earlier prediction that was calling for growth of 6.6% to 90.4 million users. Growth is expected to flatten in 2020, eMarketer said in a statement Wednesday.

“Many users didn’t like how Stories and chats were mixed together in a confusing redesign that went into effect in late 2017 and was broadly available by early 2018,” said Showmik Podder, a forecasting analyst at eMarketer. “The backlash was so severe that Snapchat was forced to scale back some of the changes just a few months later.”

Snapchat’s shares were down more than 5% in afternoon trading, stemming a four-day run of gains.

Pulling back the changes wasn’t enough to prevent this year’s dip, eMarketer said, and they forecast that between 2019 and 2023, Snapchat will add just 600,000 new US users.

The 2020 growth rate of 0.4% is seen remaining below that of general US social network usage of 2.4%. Rising competition is also taking some blame for Snapchat’s decline, with Facebook’s (FB) Instagram seen picking up many of the people who opt to leave.

“But the product launches the company announced last week, including an in-app gaming platform, may improve user engagement and time spent, particularly among its core young user base,” said Jasmine Enberg, a senior analyst. “Gaming also provides a new revenue stream for Snapchat that could boost its ad business in the future.”

Companies: Snap Inc.
Price: 11.76 Price Change: -0.59 Percent Change: -4.78

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