Shares of Snap Drop on Slow User Growth

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CBJ — Snapchat-owner Snap Inc. has reported slower user growth than had been expected and that was enough to send shares down about 20%.

There are concerns that Snapchat is being dominated by rivals such as Instagram, which is owned by Facebook.

Daily active users rose to 178 million in the third quarter from 173 million in the second quarter but that was only about 50% of the expected growth in that time-frame.

Snapchat is known for its messages that disappear within a certain time of being posted; it can be anywhere from seconds to hours, depending on user settings. Critics say that may limit future growth potential, with many people wanting their photos to remain online permanently. Having photos disappear seems more niche than practical when building a growing network. Instagram photos remain on a user’s account and are only removed if the account holder chooses to do so.

Snapchat is particularly popular with millenials and is essentially a real-time chat that includes disappearing photos and videos when the conversation ends, or soon thereafter. It’s a service that definitely has popularity, but it’s unclear if that potential is at or near its maximum and what future growth it can expect without making changes. Keep in mind, Twitter just expanded it’s character count in single messages from 140 to 280.