Snapchat Downloads Are Growing, User Backlash Notwithstanding

MarketsMotley Fool

There's been much consternation regarding Snapchat's major redesign. In recent months, early user reviews were overwhelming negative: A social media hoax promising to bring back the old interface went viral, a change.org petition asking for the old version back now has over 1.2 million signatures, celebrity Kylie Jenner has seemingly abandoned the service, and numerous Street analysts have downgraded Snap (NYSE: SNAP) shares in part due to the associated risks to the business.

Meanwhile, CEO Evan Spiegel is doubling down, arguing that the criticisms only "validate those changes."

Continue Reading Below

Well, it's not all bad news. Snapchat downloads are growing.

The upside of negative publicity

TechCrunch reports that Snapchat downloads have surged recently, jumping 76% in the week after the new version rolled out, citing data provided to the outlet by mobile app analytics company Sensor Tower. Compared to the week preceding the rollout, first-time installs were up 55% on average for the week following the redesign. Those figures represent a reversal from the previous trend: Installs had been declining ahead of the redesign.

Sensor Tower's data only covers the U.S., Snap's most important market. The company had 80 million daily active users (DAUs) in North America last quarter, out of its global total of 187 million DAUs, and monetization is about four times stronger in North America than other parts of the world.

Curiosity about the new interface has apparently coaxed more users into checking out the popular photo/video messaging service for the first time. Somewhat ironically, all of the negative press surrounding the redesign (which Snap now lists as a risk factor in its 10-K) is driving interest.

Will they stick around?

Trying Snapchat for the first time is one thing, but retaining (and subsequently monetizing) those users is another. Snapchat's old interface was unintuitive and hard to use for new users, particularly those in older demographics. In addition to the redesign, Snap has been hard at work improving the performance of the Android version, and early indications suggest those efforts are paying off.

Spiegel noted on the earnings call earlier this month that more users are coming in from Android, and more users within that total are sticking around:

An increase in downloads and a higher retention rate are encouraging signs for the beleaguered company. The real test will be what kind of DAU metrics Snap posts in the next several quarters.

10 stocks we like better than Snap Inc.When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Snap Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 5, 2018

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.