JPMorgan downgraded Snapchat parent company Snap this week, with analyst Doug Anmuth expressing doubt over Snap’s plan to bring in older users, believing they will not leave Facebook’s Instagram platform.
“Snap expects the next leg of user growth to come from the 35+ age group in developed markets, and 13-34 age bracket in developing markets,” declared Anmuth on Friday in a note. “However, we believe that Instagram is much more penetrated in these demographics, and it will be challenging for Snap to pull users away from Instagram.”
According to Bloomberg, JPMorgan “slashed” Snap’s “price target in half, to $6.”
This month, Snap’s survival plan leaked to the press, and revealed the company’s intentions for Snapchat in the future.
In the plan, Snap admitted that its infamous redesign of Snapchat was a disaster, and proposed focusing on an older demographic for the platform looking forward.
“Most of the incremental growth in our core markets like the US, UK, and France will have to come from older users who generate higher average revenue per user,” proclaimed Snap CEO Evan Spiegel. “Growing in older demographics will require us to mature our application… Many older users today see Snapchat as frivolous or a waste of time because they think Snapchat is social media rather than a faster way to communicate.”
“Changing the design language of our product and improving our marketing and communications around Snapchat will help users understand our value,” he continued, adding, “Aging-up our community in core markets will also help the media, advertisers, and Wall Street understand Snapchat.”
Snap has laid of over one hundred employees at the company in 2018 so far, following losses and scandals over the past few years, and in February, the company’s value dropped $1.3 billion after one of the app’s biggest influencers, Kylie Jenner, insinuated that no one used Snapchat anymore.