Instagram Stories is on the rise, according to Facebook executives. So where does that leave long-suffering Snap Inc. (SNAP) ?
On Wednesday, Facebook (FB) posted a blowout quarter beating estimates on quarterly revenue and profits. After a year of nearly nonstop scandals, it also sought to shift focus onto some of its more promising lines of business, including Stories -- the ephemeral vignettes users can post using both core Facebook and Instagram, the latter of which was cited by Facebook executives as a top development priority in 2019.
Instagram Stories now has 500 million daily active users, the company said. And on a call with investors, Facebook COO Sheryl Sandberg also described it as a boon for advertisers.
"People are creating more stories and sending more messages, which means these are emerging areas of opportunity for marketers. Today, we're also announcing that 2 million advertisers are using Stories to reach customers across our family of apps," Sandberg said on the call.
So how might this affect Snap -- another messaging service that's been long overshadowed by Facebook's size and reach?
With its stock up 1.67% on Thursday, investors evidently didn't feel the need to flee on the basis of Facebook's strong earnings report. And recent reports also indicate that Snap may be courting marketers in a different way.
According to Reuters, Snap is considering backing off the original feature that made Snapchat a sensation years ago: Disappearing messages, a gimmick that Facebook ultimately implemented into its own family of apps. That was part of a streak of Facebook copying some of Snap's popular features -- such as Stories -- and one that generated a good deal of pessimism around Snap's prospects. Its stock is down about 75% since it went public in March 2017.
Reuters reported that Snap is weighing an option to make messages permanent or longer lasting, as well as to reveal the identities of those who post public messages. If it does, it could be a move to break out of Snap's walled garden that locks the content inside of the app.
Making the content last longer could also be a play for more advertising revenue, according to Debra Aho Williamson, a social media marketing analyst with eMarketer.
"The advertising would be visible for longer, and I could see advertisers paying more for it," she told Reuters.
Yuval Ben-Itzhak, CEO of social media marketing firm Socialbakers, added that the rising popularity of Stories-style products may bode well for Snap.
"It's very likely that platforms like TikTok and Snap are also seeing the positive impact of the success of the Stories format," he said. "The small lift in Snap's stock price post Facebook's earnings indicates that the market may expect Snap Stories to have also seen an increase in engagement, which might result in more revenue when Snap reports their earnings next week."