Snapchat Adds Video Feature: Will It Help Save Valuation?

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Snapchat has added features that bring it closer to competing with wireless phone companies and products like Apple Inc.’s (NASDAQ: AAPL) Facetime. The company announced a combination of video and voice options, via a release labeled Snapchat 2.0.

Snapchat needs to offer users new features to boost revenue, which re/code has estimated at $300 million this year. Investors have not been dazzled. Fidelity, one of the unicorn’s investors, chopped the valuation of Snapchat by 25% last year to $12 billion. Snapchat has joined several unicorns that have had their values decimated. Without astonishing revenue growth in 2016, the valuation could be chopped again.

The video product mimics the creation of short films. One has to wonder if it has a utility among a number of other video-centric smartphone products. Nevertheless, Snapchat needs to keep up with the times, at least to show a measure of innovation.

In a blog post, management wrote:

Today, we’re excited to introduce Chat 2.0. You can start by sending a few chats, and when your friend shows up, start talking or video chatting instantly with one tap. Your friend can simply listen if you want to sing them a song, or watch if you have a new puppy to show them. If they aren’t there, you can quickly send an audio note to say what you mean. And sometimes, a sticker says it best 🙂

What we love most about the new Chat is how easily you can transition between all these ways of communicating — just like you do in person. When that’s possible, you aren’t texting, calling, or video chatting … you’re just talking. We’ve been working on this redesign for a while — we can’t wait to hear what you think!

Not a single company has management that is not excited about new products. Whether they get adopted is another matter.