Snap Inc. stocks jump Thursday, May 16, after Facebook Inc. dissolves Direct— a standalone messaging app made for Instagram, much like Messenger to Facebook, that was created to compete with Snapchat.
It was confirmed by social media industry commentator, Matt Navarra, in a tweet last week saying “In the coming month, we’ll no longer be supporting the Direct app” while guaranteeing previous users that “… conversations will automatically move over to Instagram, so you don’t need to do anything.”
While the decision to end the app is final, Facebook reassures that improvements to Direct features will continue, albeit it being integrated into Instagram instead.
In previous years, Instagram has enjoyed considerable success after adding a new feature called Stories where users can share photos or videos that ‘expire’ within 24 hours. This tech, however, was initially pioneered by Snapchat, which fundamentally is a photo and video-messaging platform that allows users to send posts directly to friends instead of sharing for a broader audience. Still pursuing to capture many of Snaps market, Facebook developed Direct for Instagram to compete with Snap’s more personal approach to photo and video sharing.
With Snapchat having one less competitor to fend off, investors responded by bidding up Snap’s stocks. After trading on Thursday at the New York Stock Exchange, Snap shares are up 7% at $11.53.
Their recent quarterly earnings reported daily active users rising to 190 million last year and staying relevant to a younger demographic. Snapchat expects its revenue to go up between $335 million and $360 million, representing a growth of 28% to 37% for a year-on-year comparison in the upcoming quarter. With additional updates for Android users, analysts at Credit Swiss say that it is “in a better position to address user demand across the globe.”
