Snapchat growth slowed 82% after Instagram Stories launched

Snapchat was flying high in early 2016, but the launch of direct competitor Instagram Stories coincided with a massive drop in how fast Snapchat was growing, judging by new stats in its IPO filing. That aligns with our report that multiple analytic providers and social media talent managers saw a big decline in snapchat usage after Instagram Stories came out.

While we can’t be sure Instagram Stories directly caused the issue, its rapid rise is highly correlated with Snapchat’s slow down. The rise of international Snapchat Stories competitor Snow also could have contributed. Meanwhile, Snap says technical errors in the roll out of new products may have inhibited user growth at the end of Q3.

That means Snapchat was growing at just one-fifth of the speed it was two quarters earlier. Its growth rate actually slowed beneath that of Facebook, which grew daily users 4.2 percent in Q4 to reach 1.23 billion. By December, Snapchat had 161 million users, but that’s not enough to buck this trend. If you calculated the growth between the Q3 average and December 2016, it would still only be 5.2 percent.

This decline in user growth rate may force it to define itself not by scale, but by the deep engagement it shows. The most impressive stats in today’s IPO filing centered around just how often each of its users open the app. The average daily user opens Snap chat 18 times a day and uses it for 25 to 30 minutes, with 60 percent of them creating Snaps and/or using its chat feature daily.

That engagement, combined with vivid full-screen ads, may be enough for it to build a healthy business. But you can expect the growth rate to become a fixation for Wall Street.



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