Interest in Snapchat is on the rise once again, based on an update that Snap CEO Evan Spiegel recently shared with staff, which projected that the app could reach 475 million active users in 2024, beating market estimates.
As reported by Command Line, Spiegel has additionally projected that Snap’s full-year ad revenue growth for next year could best 20%, which is also significantly above market predictions.
Snap shares jumped 12% in Monday trading as a result of Spiegel’s optimistic estimates.
Snap’s has been able to carve out a niche among younger users, with many teens using the more private app to share messages and interact, in favor of the more generally popular platforms.
By honing in on this audience and use case, Snap has been able to recover from Meta essentially stealing one of its key features in Stories. But even so, ad growth on Snapchat has slowed in recent months, due to expanded impacts from Apple’s iOS 14 update, and the war in Europe, among other events.
Which is also worth noting in relation to Snap’s growth.
While Snap has continued to add users at a steady rate, it hasn’t been able to monetize them as successfully, with much of its expanding audience now coming from developing markets, like India, which don’t yet drive as much revenue intake.
That still bodes well for future opportunities, which may be what the market is now looking to, though it’s the revenue projection that’s likely sparked the most interest.
Snap posted an overall revenue decrease of 4%, year-over-year, in its Q2 report.
Of course, neither of these estimates are set in stone, and Snap would still need to get a lot right to make them happen (worth noting, too, that Snap has since labeled them as “stretch, internal goals only”).
But it is a positive projection for the company after recent struggles, which has also seen it cut staff and shut down its ARES enterprise AR project.
ARES did seem to be an area of opportunity, providing Snap’s AR tools for in-store activations and integrations. But amid rising costs, and a tougher market, Snap clearly wasn’t generating the interest that it needed. Snap shed 170 roles as a result.
The next big question, then, is whether Snap will be able to afford to keep investing in its AR development, and funding its next-level digital tools, in order to keep up with the next stage, where AR wearables are going to become a reality, whether provided by Snap or somebody else.
Because even if Snap can’t bring an AR version of its Spectacles to market, it can still play a big part in that shift, which could be another area of opportunity, if Snap’s able to maintain its AR momentum.
Maybe that’s another reason for the renewed market optimism, though I do also have another theory: Snap could be a takeover target.
Apple and Microsoft would both likely consider such an acquisition, while Meta has tried to buy it before, and may also still see value in Snap’s business. As other analysts have noted, even Netflix or Disney might take an interest, and it could be that rumors of potential next steps may be filtering through investor circles, boosting interest in Snap stock.
Either way, Snap is getting more attention, which could bode well for the company, one way or another.