Kylie Jenner breaks up with Snapchat, and the $1.3 billion loss in stock value is a lesson for other companies

Reality TV star Kylie Jenner tweeted: “sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad” Wednesday afternoon. Then the stock value of Snapchat’s parent company fell by 6 percent – amounting to $1.3 billion – by the next evening.

Snapchat is an app allows people to create “stories,” called “snaps,” using a variety of silly and cute special effects. The snaps only last 24 hours, which is part of their appeal. While Twitter, Facebook and Instagram hold content forever, Snapchat is for now only.

For a long time is was unclear how Snapchat would have a sustainable business model. Instagram and Facebook co-opted some of its features almost immediately. Both Instagram and Facebook added the short-lived stories and Instagram picked up the special effects as well.

A big problem for Snapchat is its reliance on celebrity love to support its business. Celebrities in general, and Kardashian-Jenner sisters in particular, are not known for their sustained interest in a product or service.

Other internet companies should feel jittery over what happened to Snap. The same thing can happen to any company that requires a Kardashian to survive.

Jenner was not a paid spokeswoman for Snapchat, merely an influential user. Unlike Twitter, which simply provides a platform for celebrities to bypass the media and talk directly to their audiences, Snapchat also provided celebrities with cute bunny ears and noses.

It all got old eventually. The fact that Jenner used Twitterto talk about giving up on Snapchat had to burn.

Jenner recently become a mother. While her brand remains selfies and high sex appeal, Snapchat is just the sort of app to have a limited shelf-life for the maturing person.

The valuation of Snapchat’s parent company, Snap, of $18 billion to $20 billion has long seemed absurd to many observers. How could a company that made $300 million in 2016 be worth so much?

Since the value of the company came mostly from future speculation of what Snapchat could earn – and that speculation was tied to celebrities remaining enamored with the service – it’s not hard to see the Snapchat bubble bursting.

It’s the problem facing many American businesses today. Can they be worth something while not making anything?

Getting one of the Kardashians to tweet about a stock, for example, could give the company a momentary bump. But as Snap is learning, that’s just not enough. If a company isn’t making enough money – as opposed to speculating on what it could earn someday – it’s in a precarious position.

Other internet companies should feel jittery over what happened to Snap. The same thing can happen to any company that requires a Kardashian to survive.

Karol Markowicz is a columnist at the New York Post. She has also written for Time, USA Today, The Observer, Heat Street, Federalist, Daily Beast and elsewhere.

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http://www.foxnews.com/opinion/2018/02/24/kylie-jenner-breaks-up-with-snapchat-and-1-3-billion-loss-in-stock-value-is-lesson-for-other-companies.html

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