Kylie Jenner's complaints about Snapchat may be battering Snap Inc.'s (SNAP) - Get Report stock on Thursday, but the company is hoping some changes to its heavily-criticized redesign may help placate angry users.
Snap this week promised to update its redesign after a petition on Change.com asking the company to ditch the new version garnered more than 1.2 million signers. The company said that a new update for iOS and Android will soon be available that creates tabs in the Friends and Discover pages to make it easier to find and sort stories, chats and subscriptions, addressing one of the primary complaints about the redesign.
One of Snapchat's most famous users, Jenner tweeted her distaste for the app's new look on Wednesday afternoon, helping send the stock down more than 7% on Thursday and adding to declines already suffered in the last week.
Soon after, however, Jenner tweeted that she still loves Snapchat.
Analysts say that Snap's controversial redesign was a "necessary evil" to expand its user base and increase ad growth, and the stock may respond a bit in the short term to the negative reaction from millennials, the company's largest demographic.
The criticism Snap faces underscores the vital balance tech companies must maintain between creating apps that have a wider appeal and existing users wanting things to stay familiar and consistent, said Greg Portell, lead partner at A.T. Kearney.
"The interface design was already highly intuitive and very easy and innovative to navigate, so to then look for ways to improve while adding new functions was to walk into a trap," Portell said.
On the other hand, Pivotal senior research analyst Brian Wieser said that investors know that "a soft breeze can cause Snap stock to move," so the recent decline isn't a concern. GBH Insights' Daniel Ives also noted that the stock is settling in after a massive run post-quarter. Following its recent fourth-quarter earnings report in which Snap beat earnings estimates and reported solid user growth, shares jumped 40%.
Now, Ives said, Snap investors and analysts will have to wait and see how the latest changes impact the company in the coming months, which Portell said will come down to whether the company delivers on increased functionality to advertisers and consumers, especially those 35 and older.
"Millennials and especially tweens and teens are their power users and core platform, but a lot of that demographic doesn't spend money, so advertisers don't really focus on them," Ives said. "But [the changes] will backfire if their core power users start to walk away and not engage in the platform."
However, at the end of last quarter, Snapchat revealed that the early performance of the redesign showed significant increase in time spent among users over 35 years old.
"[Snapchat] is still getting their sea legs, but there's a huge opportunity to make change right now," Ives said. "They're not going to get this right in the first shot; it's an evolution."
TheStreet's Executive Editor Brian Sozzi explains the Kylie Effect on Snap's stock on Jolt. Watch below.