SAN FRANCISCO — When Snapchat’s app was redesigned late last year, a viral rage gripped its passionate and young users.
Social media star Kylie Jenner tweeted that she had not been using the app as much and called the changes “sad.” More than 1.25 million people signed a Change.org petition to get the company to return the app to its old design. A complaint on Twitter about the Snapchat redesign became one of the most retweeted messages of all time.
On Tuesday, Snapchat’s parent company, Snap, said it would redesign parts of the app’s redesign after the overhaul had dragged down its business.
For the first three months of the year, the social media company reported Tuesday, it posted a narrower loss than a year earlier and a 54 percent increase in revenue, to $231 million, which was below analyst expectations. While Snap’s number of daily users rose to 191 million in the quarter, that figure was also below what Wall Street had anticipated. And the company said its user numbers in March were even lower, though it did not release them.
Evan Spiegel, Snap’s chief executive, cited Snapchat’s redesign as a major reason for the disappointing performance.
“A change this big to existing behavior comes with some disruption,” he said, referring later to “headwinds from the redesign.”
The quarterly results, which sent Snap’s stock plunging more than 15 percent in after-hours trading, were a reversal from the previous quarter, when the social media company had finally appeared to shrug off its losing streak with strong sales and user growth. Snap, which went public in March 2017 and is often seen as a competitor to Facebook, has been grappling with inconsistent results, casting a cloud over its prospects.
The latest earnings indicated that Snap had not been able to capitalize on the woes of Facebook, which has been dealing with a backlash over data privacy. Facebook said last week that it had added 70 million monthly active users in the first quarter, bringing it to 2.2 billion.
So now Snap will tweak its redesign.
Snapchat began as an app to send disappearing messages to friends, but it later added professional content from media companies and other features. When the company changed the app last year, the goal was to separate chats and stories from friends from the content of media properties, such as celebrities and publications.
In practice, that meant Snapchat had two sides. The left side of the app featured chats and stories shared with, or by, people’s friends. On the right side was content from publishers, amateur creators and celebrities and stories that Snap curated from user-generated videos and photos.
The goal was to expand the more lucrative media side of the business and to increase the app’s appeal to an older demographic. But over the past few months, the changes diluted the core chat experience, which became cluttered with user stories. Snapchat’s users, who are mostly young, quickly rebelled.
“Snap has their back against the wall,” said Daniel Ives, the head of technology research for GBH Insights. “They need to work with their user community.”
Now the company is moving stories made by friends back to the side of the app that also has media content. This change is aimed at decluttering the app’s chat function.
The pivots have some analysts worried about Spiegel’s leadership of Snap.
“What I’m looking for is some direction,” said Richard Greenfield, a media and technology analyst at BTIG. “Evan was so decisive in that your friends are distinct from influencers — you’re not friends with Kim Kardashian, so she shouldn’t be in your friends list — and yet now they seem to be wavering on that.”
Content, rather than chat, is “where the monetization potential is,” Greenfield added.
Anthony DiClemente, an analyst at Evercore ISI, said, “The app redesign is a question and an open debate.” He added, “I don’t know that the Snap leadership has proven itself to such a degree that you have high-conviction long-term investors in the stock right now.”
Even as Snap’s growth disappoints, the company is spending a lot of money, which is another area of concern for investors. The company spent $36 million in the first quarter as it moved from Venice, California, to a new office in Santa Monica, California, up from $21 million in expenses the previous quarter.
“They’re spending money like a 1980s rock star,” Ives said.
Spiegel was unapologetic about the changes to Snapchat’s app.
“When we build products, we’re not just thinking about what our community is going to like to use right away,” he said in a conference call on Tuesday. “We’re thinking a lot about how our products will help us accomplish our mission.”
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