Snap (SNAP) Unveils New "Stories In Search" Feature

Recently, Snap Inc (NYSE:SNAP) rolled out a new ‘Stories in Search’ feature. This feature now enables a person to search from more than one million Stories posted on the social network.

In a blog post, Snapchat said “Over time, the number of Snaps that were created by our community and added to Our Story simply overwhelmed our curation team—and inspired us to create something new. We’ve built a new way to understand what’s happening in Snaps that are submitted to Our Story, and to create new Stories using advanced machine learning. The results have been amazing: you can search over one million unique Stories on Snapchat!" At present, the feature has been unveiled in select cities.

Snapchat has been curating Stories for its users, whereby they can see “Snaps from interesting events all around the world — from the field of the Super Bowl to the summit of Mount Everest!”

Analysts observe that Snapchat is trying to attract more ad dollars by unveiling the search feature. Ad revenues, like all other social media sites, remain the mainstay of Snapchat’s revenues. However, stiff competition from the likes of Alphabet (NASDAQ:GOOGL) and Facebook (NASDAQ:FB) , as well as from smaller rivals like Twitter (NYSE:TWTR) in the digital ad market, remains an area of major concern.

In fact, Facebook outshines Snap in almost all aspects. The company enjoys a first mover advantage in the social media space with over 1.9 billion users from every segment of demography. It has a gargantuan base of over 1 billion DAUs compared with 158 million for Snap. Facebook presents a much larger canvas for advertisers than Snapchat. In fact, Facebook’s total addressable market (TAM) has been reported to be 80% bigger than that of Snap.

Facebook had recently introduced the “Stories” feature — a slideshow of photos and videos that vanishes after 24 hours — to its main platform. Earlier, it had added this blatant rip off of Snapchat’s hallmark feature to both Messenger and Instagram. “Stories” on Instagram has proved to be a massive hit, with 150 million daily active users.

This does not bode well for Snapchat. Analysts have related slowdown in user growth for the social media platform by citing popularity of Instagram stories. As a matter of fact, media reports have quoted Snapchat “admitting” that increasing competition from big players like Facebook, which have better resources, is a big threat as they can easily lure users to their platform.

Moreover, analysts observed that Facebook can easily take chances by unveiling features that are similar to other social media services. This is because if these “inspired” features do not work, it can easily roll them back, like Poke, Slingshot and Bolt previously. After all, platforms like Facebook, Instagram, WhatsApp and Messenger do have their own inherent features that will prevent them from losing users.

As a result, at the outset, Snap mostly had a “Sell” rating. However, last week, several underwriters assigned the company “Buy” ratings, given the monetization opportunities. This move has definitely baffled many, as it goes against the general Wall Street sentiment about Snapchat, i.e, a bearish outlook. There is an obvious hint of prejudice. However, Fortune has asked to be cautious, as these underwriters have ample access to inside information. These ratings are, therefore, not to be dismissed outright.

Currently, Snap has a Zacks Rank #3 (Hold). Since Mar 2, Snap shares declined 7.97% as against 0.90% decline witnessed in Zacks Categorized Internet Software market.

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