Instagram’s loss is not necessarily Snapchat’s gain

25 Sep Instagram’s loss is not necessarily Snapchat’s gain

News broke last night that Instagram founders, Kevin Systrom and Mike Krieger, are leaving the company. This was certainly a shock, as Instagram could easily be considered one of Facebook’s most successful acquisitions to date. Systrom and Krieger were the brains behind the app, and it’s anyone’s guess what Facebook will do in their absence. Indeed, the company’s stock fell dramatically once the news posted–although it improved as the day went on.

Some saw this departure as a potential opening for Snapchat, given that the company’s app has long been considered a major Instagram competitor; Facebook has even stolen more than a few of Snapchat’s most popular features.

Yet not everyone thinks the high-profile exit means an instant win for Snap. In an email to Fast Company, Pivotal analyst Brian Wieser writes that Snap and Instagram “aren’t direct substitutes / competitors as, let’s say, the Washington Post and New York Times are for national news.”

It’s true that both apps are competing for people’s attention, but even if Instagram’s user experience declines in the wake of Systrom’s and Krieger’s exit, users aren’t automatically going to defect for Snapchat. Put another way, Snap won’t get better simply because Instagram may become worse.

Indeed, things haven’t been looking great for Snap: A new eMarketer report published this morning lowered its projection for the company’s ad revenue. The firm believes the app will bring in only $662.1 million this year, compared to its earlier forecast of $1.03 billion.

And despite today’s news, Snap stock is only up by a little more than 1%.

Source: Fast Company