Although Snap has enjoyed a recent rise in stock price, long-term trends don't bode well for the company. Snap’s revenue growth is slowing—from 103% in 2017 to 43% in 2018—and with a projected growth rate of 34%, at best, in 2019. Snap’s growth rate for ad impressions is also potentially unsustainable. According to its annual report, impressions grew 575% in Q4 of 2017, 278% in Q3 of 2018 and only 179% in Q4 of 2018. On top of that, Snapchat lost users for the first time in 2018, two million in Q3 and one million in Q4, which is a terrible sign for a business that relies on user engagement and CPM for revenue.
If recent developments continue, things may be turning around. Ad sales are up slightly, ad prices are finally rising and new products are on the horizon. Maybe momentum is beginning to shift in Snap’s favor. However, when one takes a step back, longer term numbers point to underlying instabilities in Snap’s business.
If recent developments continue, things may be turning around. Ad sales are up slightly, ad prices are finally rising and new products are on the horizon. Maybe momentum is beginning to shift in Snap’s favor. However, when one takes a step back, longer term numbers point to underlying instabilities in Snap’s business.
