Rihanna snaps: Snapchat’s diamond-stock turns rough

With more and more celeb critics raining on Snapchat’s parade, Rihanna certainly would not be handing over her Umbrella. The messaging app was criticized by the singer-superstar, after an advertisement for a game with options to either ‘Slap Rihanna’ or ‘Punch Chris Brown’ came up on Snapchat.

Rihanna, a victim of physical assault allegedly from singer and then-companion Chris Brown, called Snapchat’s advertisement offensive to domestic violence victims and urged users to delete the app.

Snapchat quickly withdrew the ad and apologized, but the damage was already done. The music star’s disapproval sent the stock price of Snapchat’s parent Snap Inc. (SNAP) tumbling as much as 5% since Thursday and wiping out around $800 million from its market cap. This fall led to a drop in CEO Evan Speigel’s net worth by $150 million.

Last month, Kylie Jenner’s tweet on her non-usage of the app sent the stock crashing by more than 6% and led to the loss of $1.3 billion in market cap. The stock was also downgraded, following its redesign which was not very well-received by users. Snap’s market cap has gone down by 25% since its IPO last year.

At times, celebrities can have quite an influence on how businesses perform. Other examples include the NRA-affiliated companies’ boycott by celebrities such as Debra Messing and the slamming of United Airlines (UAL) by actress Olivia Munn over a pet incident. While the NRA boycott had a slight negative impact on shares of companies such as Amazon (AMZN), Apple (AAPL) and FedEx (FDX) due to the celebrity influence, United’s stock drop was not directly associated with Munn.

However, it is a well-known fact that when a celebrity is involved, the news gets more attention and it tends to stay longer on the radar. This has the potential to influence businesses both positively and negatively.

The Snapchat incident also brings us to the topic of ill-conceived marketing. Instead of apologizing later for an advertisement blunder, why allow it in the first place? With two celeb incidents causing significant damage, Snap has very little room to make mistakes from its end.

On the bright side, however, Snapchat’s advertising revenue in the UK is expected to reach £181.7 million in 2019, surpassing Twitter UK. Although Snapchat’s growth rate towards 2020 appears strong, it is still overshadowed by the giants — Facebook and Google. The app also faces stiff competition from Instagram, which is expected to double its current market share by 2020.