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It's one step forward, two steps back for Snap (NYSE: SNAP), which was basking in the glow of a better-than-expected earnings report, only to be lambasted by, well, just about everyone over a seemingly botched app redesign.
CEO Evan Spiegel is putting up a brave front, saying the complaints "validate" the changes that were made and that he is "excited" about the response so far. Sure, that's the feeling anyone would get when they see one online petition garnering over 1.2 million signatures urging Snapchat to change the app back to the way it used to be.
Image source: Snap.
Snap has no intention of undoing the changes it's made, saying only that the new design "can take a little getting used to." That's the real risk: The intransigence of management to admit it may have made a mistake could very well alienate the new users the app has only just begun to attract again.
The year of living dangerously
After a year of numerous missteps following its initial public offering, Snap looked like it had gotten itself back on track. Its fourth-quarter earnings report showed the number of daily active users increased 8.9 million to 187 million, an 18% gain over the year-ago period and the first time in two years it had posted a higher rate of growth.
Even its recent decision to begin broadcasting live updates from the Winter Olympics in Pyeongchang, South Korea, but to not allow users to do so, looked like a wise move considering the controversial content that's often found its way onto Facebook's live programming, and even Alphabet's YouTube's.
Yet all that's at risk if there really is this groundswell of opposition to the app's makeover.
The redesign, which was originally announced in November, is the biggest overhaul of the application Snap's performed so far in a bid to keep its users engaged. The update walls off content from friends and family from that posted by celebrities and media. Instead of receiving all the content in one spot, users have to swipe left to get content from friends and family and swipe right for branded and celebrity content.
But users don't like the change, as the petition signatories make clear, saying that rather than making the app easier to use, it does the opposite and renders some content useless.
All in the family
Part of the problem with separating the content the way Snap has done is that many users feel a kinship with celebrities, and the change makes them feel like they're no longer friends. Spiegel dismisses the complaint, saying: "Exactly. They're not your friend."