Shares of Snapchat’s parent company SNAP opened for trading at $24 on Wednesday, up 41% from the IPO price of $17. The stock continued to climb throughout the day reaching 25.74 or 52% above the IPO price by mid-afternoon. At the opening price, SNAP had a valuation of about $33 billion.
But the newly minted multi-billionaire founders should be looking over their shoulders as the deeply unprofitable company whose user growth is shifting from under 24 to 45 = 54 year olds.
The new competition is coming from Facebook’s Instagram.
“The usage trends are largely the result of a shift in the primary use case of Snapchat,” said eMarketer analyst Jaimie Chung. “Older groups are now more likely to tune in for content. The platform has multiple partnerships with television networks for mini-episodes. Meanwhile, the younger groups are less likely to add Snapchat when Instagram Stories can fulfill their broadcasting needs.”
“We’re projecting this gap to widen as Instagram focuses on growing its user base to maximize reach, while Snap Inc. seems to be focusing on keeping its niche audience engaged and spending more time within the app,” Chung said.