Snap’s Stock Plunges 30% After Disappointing Q4 2023 Results; Plans to Unify User Experience Across Stories and Spotlight
Snap’s stock took a sharp dive of 30% following the announcement of its Q4 2023 results, which fell short of analyst expectations. CEO Evan Spiegel revealed on the earnings call that the company is embarking on several initiatives this year to stimulate growth. These include streamlining the user experience across Stories and Spotlight, enhancing ad interactions across platforms, and boosting engagement and user growth in North America and Europe.
Spotlight, Snap’s TikTok-rival platform launched over three years ago, has shown promising growth metrics. According to the company’s Q4 2023 earnings release, total time spent watching Spotlight surged by 175% year-on-year, with average monthly active users increasing by 35% year-on-year.
Spiegel outlined the company’s intention to leverage ranking mechanisms and recommendation engines from Spotlight and integrate them into Stories for improved engagement. However, he acknowledged the challenge of implementing changes in core product offerings and emphasized the importance of thoughtful execution to prevent negative impacts on various aspects of Snap’s business.
The convergence of Stories and Spotlight experiences is also driven by Snap’s efforts to provide advertisers with better incentives. Spiegel highlighted that Spotlight boasts about 99% brand-safe content, offering advertisers a brand-safe experience without the premium costs associated with other platforms.
Snap plans to utilize insights from My AI usage to deliver more relevant and engaging advertising to users. The company introduced new ad products for Stories and Spotlight in May 2023, along with a sponsored link feature for My AI.
Furthermore, Snap’s focus on enhancing its iOS app aims to attract greater engagement from monetizable regions such as North America and Europe, following years of investment in evolving the Android app to drive growth in emerging markets.
In a bid to optimize its business operations, Snap recently implemented cost-cutting measures, including a workforce reduction of 10% (impacting over 500 employees). The restructuring aims to streamline the organization and ensure the capacity for incremental investments to support long-term growth objectives, as stated in an SEC filing.