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Is Snapchat's Growth Hampered By Instagram? Platform Faces Competition (Again) From Facebook

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Snapchat's parent company Snap just went public with its $3 billion initial public offering on Thursday amid news that the app has experienced a decline in user growth for the past two quarters.

But the second quarter of 2016 was Snapchat's best quarter ever in terms of growth. It accumulated 143 million daily users at an astonishing 17.2 percent growth rate.

Things have gone downhill from there, however. According to a report filed by Josh Constine of TechCrunch, Snapchat slowed down and went through its slowest growth in the past two quarters since the company made its data public in 2014.

Snapchat grew by 7 percent in the third quarter of 2016 with 153 million daily users but, in the last quarter, its growth rate suffered even further as it pulled in 158 million daily users, resulting in a measly 3.2 percent increase. These numbers show that Snapchat grew at one-fifth of the speed that the company experienced two quarters earlier.

Snapchat Facing 'Significant Competition'

Snapchat rival Instagram launched Instagram Stories on Aug. 2. The new feature had 150 million daily users in just 25 weeks after it was launched, roughly the same numbers that Snapchat has. This could have negatively impacted Snapchat's growth. In the company's IPO filing, it admitted that it faces "significant competition in almost every aspect of our business both domestically and internationally."

Another factor to the app's inhibited growth could be the lack of Snapchat presence among developing countries and Asia. On the other hand, an overwhelming 80 percent of Instagram users are located outside the U.S., where the Stories feature quickly gained traction. Snow, a South Korean app that is similar to Snapchat, may have also contributed to its decline.

Snapchat Says Technicalities Contributed To Slower Growth

In its S-1 filing, the company says the lack of user growth was caused by technical glitches while the company was in the process of rolling out new products:

"We launched several products and released multiple updates, which resulted in a number of technical issues that diminished the performance of our application."

Snapchat Faces Another Clone In Facebook Stories

Facebook is shamelessly cloning Snapchat yet again with its Stories feature. The service has been in testing phase in Ireland since October 2016, and allows Facebook mobile app users to upload videos and photos that disappear after 24 hours. Once Facebook releases this feature to the rest of the world, it will serve as a new headache for the already embattled Snapchat.

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