Snapchat growth hacking shows how dire its situation is

Michael Loccisano/Getty Images

• Snapchat has attacked other platforms for growth
  hacking, or boosting their usage through tactics like
  sending push notification alerts to users.
• But it seems to have had a change of heart.
• Snapchat has been increasingly sending push
  notification alerts as well as in-app alerts to users,
  according to a new note by BTIG analyst Rich
  Greenfield.
• This signals just how dire things are for the company,
  and is a sign that “engagement is falling,” Greenfield
  wrote.

Snapchat has been employing tactics it used to scoff at
competitors for, and it’s bad news for investors.

The ephemeral messaging app has been staunchly against “growth
hacking” in the past, with founder and CEO Evan Spiegel
even calling out competitors for boosting their user trends
through tactics like sending push notification alerts.

But as the company sees user trends tumble, with daily average
users and time spent on the decline, it seems to have no option
but to warm up to growth hacking.

Snapchat has been increasingly sending push notification alerts,
as well as in-app alerts to users, according to a new note by
BTIG analyst Rich Greenfield. These include push alerts urging
users to open the app and watch their own memories, and
stories posted by their friends, as well as in-app alerts
that inform users that their friends have recently posted
stories.

“Given Spiegel’s distaste for growth hacking (and his answering
questions on the topic), we have to view the dramatic
increase we have observed in Snapchat’s growth hacking as a sign
that usage/engagement is falling,” Greenfield wrote.

This is a far cry from just over a year ago, when Spiegel said
that Snapchat’s daily active users (DAUs) were low because it
refrained from growth hacking.

“There’s a lot of this thing in our industry called ‘growth
hacking’ where you send a lot of push notifications to users or
you try to get them to do things that might be unnatural, or
something like that,” Spiegel said at the time. “The way we talk
about DAU growth at our company is as it pertains to creativity.”

The fact that Snapchat seems to have altered its stance so
considerably signals just how dire things are for the company.
Snap has been struggling to grow its user base as it faces
increasing competition from Instagram Stories, has been reeling
from a failed redesign attempt, and just this week lost
its strategy chief Imran Khan.

“To me this tells you that they are willing to do anything
possible to bring you back into the app,” Greenfield told
Business Insider. “It’s a cycle, as there seem to be less
people creating stories, and hence there is less viewership, less
time spent in the app, and therefore less opportunities for
monetization.”

Snap shares have been under pressure since last month, when the
company reported quarterly results that beat on the top and
bottom lines but acknowledged that its
number of daily active users fell 2% to 188
million, missing the Wall Street estimate of 193 million.

That, among other factors, led Greenfield to issue a “sell”
rating on Snap and drop
his price target to $5.

“We are tired of Snapchat’s excuses for missing numbers and are
no longer willing to give management ‘time’ to figure out
monetization,” he wrote. “With engagement falling and consensus
expectations too high, we believe a sell rating is warranted at
these levels.”

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