Kylie Jenner sends Snap lower – the dangers of being too cool
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Kylie Jenner sends Snap lower – the dangers of being too cool

Snap Inc.’s share price plummeted by 6.1% on Thursday as Millennial cultural icon Kylie Jenner talked it down on Twitter. The serial-Snapper, and youngest member of the Kardashian-Jenner clan, wrote: “sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad.” By the end of the day, Snap’s market cap was $1.3 billion lighter.

Facebook advances last week while Snap plummets

graph 2602 snapchat

SOURCE: Yahoo Finance

Snap’s popularity skews to younger demographics – something that Facebook and other social networks might envy. Earlier this month, a report claimed that kids were poised to desert Facebook, which is increasingly being seen as a less-than cool place to hangout. Few teens want to socialise in front of mums, dads, and grandparents, all of whom are finally making their way onto the biggest and oldest social media platform still worth joining.

But if Snap has an advantage amongst younger folk, there’s a downside too: young people are cool, and being cool means listening to people like Kylie Jenner. When random tweets from a reality TV star can cause your undoing, how safe are you really at the top of the mountain?

Facebook, with its massive, diverse, user-base is protected against this type of problem. That’s not to say that millennials might not choose to leave it because of a celebrity opinion – but Facebook has so many users (more than 2 billion) that the drop off wouldn’t imperil its advertising business straight away (something Snap, with its paltry 187 million young people, can’t claim).

It’s also far less likely to cause a contagion effect on Facebook: if all of your social media contacts begin to flee a platform, you might follow suit. On Facebook, your friends list will almost certainly include the chronically unhip, like grandma and that weird bloke you spent a year at school with three decades ago who always smelt like potatoes. Because these people are less likely to be influenced by what’s hot according to Kylie Jenner, your newsfeed will remain populated – making the effects of a dearth of cool people less immediately obvious.

This month has seen wide speculation over whether Snapchat is likely to steal valuable business from Facebook. The Jenner situation demonstrates why that might not be the case – Snapchat is inherently less stable than Facebook because its users are more susceptible to influencers.

It’s also got far fewer people than Facebook, and less ability to poach audiences than the bigger company. While Facebook’s strategy of “borrowing” some of its smaller rival’s features has helped to retain a large number of younger people, the converse seems hard to believe. In other words: can you imagine anything that will get your grandma Snapchatting? No, nor can Snap.

Investors, of course, have already cottoned on to this fact – one of the reasons its share price is up by $13 billion since the infamous Tweet was launched.

Disclosure

Dominion holds Facebook in its Global Trends Ecommerce Fund.


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