Babar Khan Javed
Mar 2, 2018

Did Kylie Jenner really destroy $1.5 billion in Snapchat value?

Are key opinion leaders really that powerful? Well, no. Here are five actual reasons Snapchat's stock dropped.

Did Kylie Jenner really destroy $1.5 billion in Snapchat value?

Last week, mainstream media outlets such as CNN, Reuters, and The Verge reported that Snapchat's stock dropped, taking $1.5 billion or roughly 3% of the company's market capitalisation with it, due to a tweet by Kylie Jenner.

Like most matters in the world, the real story is not so simple. Here's what actually happened.

1. Despised UX

Two weeks before the tweet, Snapchat revamped its user interface, user experience, and app navigation, angering users across the world. A petition on has been signed nearly 1.3 million times, demanding the changes be reversed.

2. Evan Spiegel

Tuesday, two days before the tweet, the co-founder and CEO of Snapchat sold $50 million of his shares. The revelation started the decline in shares.

3. Wall Street

Wednesday, the day before the tweet, Citigroup downgraded Snapchat's stock from 'neutral' to 'sell'. This was because Snapchat said that it anticipated a decline in user base growth for 2018, adding that acquisition plays a vital role in the platform's ability to monetize. Prominent analysts also factored in the risk of Snapchat's dependence on mobile operating systems, hardware, networks, regulations, and standards that it doesn't control.

4. Negative reviews

App Annie reported that 86% of the reviews left for Snapchat in the month of February 2018 were 1 star.

5. Google Cloud

In a filing with the US Securities and Exchange Commission, Snapchat referred to its reliance on Google Cloud for computing, storage, bandwidth, and other services, as a major risk factor, costing the company $400 million per year. The filing stated that "any disruption of or interference with our use of the Google Cloud operation would negatively affect our operations and seriously harm our business."

So, sorry Kylie, you're not that influential. A combination of factors led analysts, investors, brokers, and speculators to shed their stakes in the company, causing the share-price drop. There's always a lot more to a story.

By the way, reports this week indicate that Snapchat's downloads are growing (perhaps thanks to the 'bad' publicity) and its stock is recovering

Babar Khan Javed is Campaign's APAC technology editor.


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