Will Snap's New Product Solve Its Revenue Problems?
Snap Inc. has had a tough few years in the wake of a changing advertising landscape, but could a new revenue stream be about to pay off?
July 4, 2022

We're now well over a year removed from Apple's game-changing iOS 14.5 update that saw the advertising landscape radically shift in the blink of an eye. Companies that had previously been quite successful by simply relying on ads for the majority of their revenue were suddenly struggling. Subsequent earnings reports confirmed this, with many firms losing huge amounts of value overnight.

Snap Inc. (NYSE: SNAP) was one of the companies that suffered this fate, but at long last, it could be about to change all that...

'Snap' back to reality

Last week, Snap announced the launch of a premium version of its popular Snapchat platform. The paid version is called Snapchat+ and will cost subscribers $3.99 per month. The initial rollout will be in the U.S., Canada, Germany, France, the UK, UAE, Saudi Arabia, New Zealand, and Australia.

This development will see Snap attempt to move away from its current ad-heavy revenue model. Rising ad costs and weak consumer spending were two of the main reasons cited to be behind the company's poor first-quarter performance, when Snap plummeted by over 40% in a single day.

Snapchat+ will attempt to generate an alternate source of recurring revenue for the firm -- something desperately needed. It's aimed at "the people who spend most of their time communicating with their closest friends on Snap" according to Jacob Andreou, the company's senior vice-president of product. These power users will initially have the ability to change the icon of the app, see who rewatches their stories, and pin a friend to the top of their chats as a "BFF."

Despite a widely-used product, Snap has often struggled to monetize its core offering outside of ads. It dabbled in the hardware market with the launch of Snap Spectacles and even a small drone, but found it difficult to generate meaningful revenue. If this subscription model works, it could be the boost Snap needs in the wake of a much more difficult advertising landscape.



The Home of Successful Investing.

© 2024 MyWallSt Ltd. All rights reserved.


Services

Content

Social

Company

Support

Resources


This website is operated by MyWallSt Ltd (“MyWallSt”). MyWallSt is a publisher and a technology platform, not a registered broker-dealer or registered investment adviser, and does not provide investment advice. All information provided by MyWallSt Limited is of a general nature for information and education purposes, and you should not construe any such information as investment advice. MyWallSt Limited does not take your specific needs, investment objectives or financial situation into consideration, and any investments mentioned may not be suitable for you. You should always carry out your own independent verification of facts and data before making any investment decisions, as we cannot guarantee the accuracy or completeness of any information we publish and any opinions that we publish may be wrong and may change at any time without notice. If you are unsure of any investment decision you should seek a professional financial advisor. MyWallSt Limited is not a registered investment adviser and we do not provide regulated investment advice or recommendations. MyWallSt Limited is not regulated by the Central Bank of Ireland. MyWallSt Limited may provide hyperlinks to web sites operated by third parties. Your use of third party web sites and content, including without limitation, your use of any information, data, advertising, products, or other materials on or available through such web sites, is at your own risk and is subject to the third parties' terms of use.