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A Summary of

Snap Earnings, Twitter Earnings, Additional Notes (Stratechery Daily Update 7-27-2021)

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Stratechery
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Snapchat earnings grow even as pandemic wanes

  • The company experienced huge growth in both users and revenue in the first and second quarter this year.
    • While the pandemic may have benefitted Snapchat, its growth in the past two years is part of a larger pattern of growth since the end of 2018.
  • Though Snapchat "stories" from users' friends have declined, with the pandemic restricting daily activities, users are instead viewing more content from Discover and Spotlight.

Social Networks taking up the TikTok strategy

  • Snapchat's Spotlight is a new, TikTok-like feature which gathers the best content from across its network.
  • Similarly, Instagram is reworking its timeline to surface the best content from everywhere, not just from the people you follow.
  • Twitter's new Topics feature offers a more direct way for users to choose what's shown on their Timeline.
    • No longer relying on following users as a way of personalizing the Timeline.
    • Twitter largely credits Topics for driving the company's growth in the second quarter.

iOS 14 and direct response

  • Both Snapchat and Twitter were less affected by iOS 14 changes than expected.
    • The rollout was later and slower than expected.
    • Twitter has always had a relatively weak direct response business, making it less vulnerable.
    • Snapchat has a stronger direct response business, making it more vulnerable.
  • Facebook is the more reliant on direct response than both Snapchat and Facebook, but still hasn't felt significant impacts from iOS 14.
  • The companies will likely experience reductions in magnitude of growth, not a complete reversal in growth.
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