Will Snap be able to bounce back?

Snap’s (SNAP) CEO Evan Spiegel has confidence it will. In a memo sent to employees that was obtained by Cheddar, Spiegel highlighted various issues and set goals to breakeven in the fourth quarter of 2018 and attain profitability in 2019.

Firstly, Spiegel admitted that Snap’s much-criticized redesign was rushed and while solving one problem, it had created a host of other ones. He added that rushing through the redesign slowed down the product and made it difficult to communicate which was a huge flaw that ultimately caused a drop in daily users.

The core value of Snapchat is to be the fastest way of communication and the redesign flaws hurt this very value. Spiegel said Snap was working hard to solve these issues and its primary goal was to bring Snap back to a level where it could deliver its core value without any issues.

In line with its core value, Spiegel emphasized the importance of communication and said that all its features must help in improving communication and that the company is working to make this happen. Snap is working on personalizing the content feed such that people get to see what they want to see and not just what their friends post online.

The Discover section, which shows content from professional media companies and celebrities, has a role to play here. Snap has plans to roll out new designs and content in Discover to drive user engagement, and the company will also look at tailoring this content based on location. Snap pointed out that the popularity of features like Shows and Publisher Stories are increasing.

This is in contrast to Facebook’s (FB) strategy of prioritizing content from family and friends over publisher content and pushing them more towards users. Snap wants to give users the option to pick the content of their choice.

Snap believes that its brand and unique features give it a competitive advantage that cannot be replicated. The company feels these features must be leveraged to increase the number of daily active users and to drive user engagement. Improvements in content and increase in users will bring more revenues from advertising.

Snap feels there are opportunities to grow the user base by both expanding within its core markets and into new markets like Brazil, India and Mexico. The large population in these new markets offers plenty of growth potential and through growth in users, there will come opportunities for growth in advertising.

However, in order to increase its user base in developed and developing markets, Snap will have to solve different kinds of problems. One challenge of expanding into new markets is cost. While other established social media companies tend to offer their services at a lower price in these markets, Snap’s service might end up costing more. This would create a barrier to Snap’s goal of providing fast communication and to its growth in these markets.

Snap is also investing in augmented reality to improve the user experience on its features. At a time when platforms like Facebook are losing the confidence of their users, Snap wants to separate itself from other social media companies and establish itself as capable of providing a different experience for its users.

Snap feels it has been unfairly bundled along with the others and wants to change this perception. The company wants its users to be able to share their Stories and Snaps more honestly and make this activity more positive for them so that they do not feel pressured to post only that which is pretty and perfect.

So to answer our first question, will this help Snap? Snap’s plan to go back to its fundamental goal is encouraging. Its efforts to differentiate itself by uniquely revamping its features are on the right track. If properly planned and executed, Snap’s initiatives are sure to give it the right push forward. This is a good chance for Snap, and if the company makes the right moves, it can bounce back.

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