Snap Waits Until Facebook Plays Copycat Again

By Rick Munarriz Markets Fool.com

There's a new toy forSnap, Inc.'s(NYSE: SNAP)Snapchat users to play with, and once again, it's probably just a matter of time before Facebook (NASDAQ: FB) follows suit by cloning it for either its namesake site or its Snapchat-like Instagram.

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Snapchat is rolling outcustom Stories, a way to create a collaborative collection of photo and video snaps. Users can select which of their friends can contribute to the collaborative playlist, and custom Stories even offers a geofencing feature so all of the photos and video clips originate from the same location, something that will come in handy if the goal is to curate a collection from a specific trip or event.

True to the short-lived nature of Stories put out by individuals, custom Stories self-delete if no one adds to the joint project for 24 hours. Custom Stories will give Snapchat users a new toy to play with, and it also sets the clock for when Facebook will roll out something similar.

Image source: Snap, Inc.

Reshaping the narrative

Snap has introduced a few features that eventually worked their way into Facebook's Instagram. Snapchat turned heads when it started to let folks slap colorful stickers and more recently augmented reality effects to their snapshots. One can argue that imitation is the sincerest form of flattery, but it's not so funny now that Instagram has surpassed Snapchat in terms of daily active users. Facebook has also rolled out enhancements to its namesake juggernaut with new in-app camera tools.

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Snap is growing faster. Revenue soared 286% in its latest quarter. However, the 166 million daily active users that Snapchat attracted during the first quarter is just a 36% year-over-year improvement. Instagram is growing faster, even if Facebook's overall top-line growth is no match for Snap's triple-digit percentage pop.

Custom Stories should help with retention at Snapchat, giving its youngish user base a new way to incorporate their friends in the story-telling process. Whether or not Facebook feels that it's an addition worth pursuing at either Instagram or Facebook, it does make Snap's flagship product that much better.

Snap isn't just hoping that users teaming up will crank out stickier content. Snapchat's hoping to be a hub of original content with its Snapchat Discover platform, and this week it announced that James Corden's Next James Corden -- a fictional reality competition as the host of CBS' The Late Late Show with James Cordenseeks out a faux replacement -- will air exclusively on Snapchat in the fall. The show will even be shot in portrait mode, optimized for the way people hold their smartphones.

The volatile shares continue to trade above their IPO price of $17, nearly three months after hitting the market. It may or may not be important to stay one step ahead of Facebook, but it sure beats being one step behind.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.