August 17, 2022


Fine Art Of Business

‘Copycatting TikTok is a big trend,’ analyst says after Snap earnings

2 min read

TikTok’s massive popularity is shaping trends among social media companies, including Snap (SNAP), which reported earnings last week, said Ygal Arounian, an analyst at Wedbush (video above).

“Snap and the others are moving kind of further deeper into this creator economy world, which TikTok has done a great job capturing,” he said. “So there’s a lot of focus on creating platforms that are similar to TikTok. Copycatting TikTok is a big trend right now.”

Snap’s earnings were mixed. Although Snap missed analysts’ revenue estimates, the company simultaneously saw its global daily active user (DAU) count increase 18% year-over-year. That growth is no small feat in a sector that’s been rattled by the success of ByteDance-owned TikTok. TikTok’s grown at a rapid clip throughout the pandemic, and it’s shifted the competitive dynamics of the space. Facebook-and-Instagram owner Meta Platforms (FB) notably hired a GOP consulting firm to run a campaign that represented TikTok as dangerous to children, as reported by The Washington Post.

Though it’s frequently referred to as a social media company, Snap often calls itself a camera company.

The New York Stock Exchange on the day of Snap’s 2017 IPO. Getty.

As usual, content is king

Content, especially original content, is key to Snap moving forward, according to Arounian.

“Partnering with publishers is always going to be really important for them, but if the content strategy is working,” he said. “They’re creating original content and it’s resonating with their audience, [so] I would expect them to continue to spend on that.”

In the company’s earnings call, Snap co-founder and CEO Evan Spiegel spoke about the importance of Snap Originals — which can entwine with augmented reality — to the platform’s overall strategy.

“Snap Originals represent another important element of our strategy to improve the diversity of available content on Discover,” he told analysts. “Over 10 million viewers have watched Breakwater, our new Snap Original about a dystopian future caused by climate change that featured episodic AR Lenses in partnership with Verizon, helping Snapchatters to immerse themselves in the show.”

Broadly, the digital advertising landscape has been in flux due to Apple’s nascent clamp down on privacy in apps. Though Snap will likely be hit by these changes, its positioned to be less affected than, say, Facebook, said Arounian.

“Each platform has something unique to bring to the table and it’s about finding that incremental customer on each of those platforms,” he told Yahoo Finance. “You might not find [some customers] on the other [platform]. That’s why we’re seeing a lot more effort into these smaller platforms right now from advertisers.”

Allie Garfinkle is a senior tech reporter at Yahoo Finance. Find her on twitter @agarfinks.

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