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Facebook's WhatsApp Unveils Snapchat Inspired Features

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Yesterday, Facebook Inc. (FB - Free Report) owned messaging service, WhatsApp announced new camera features. WhatsApp users can now write/draw on photos and videos and can add emojis to the same as well as change fonts and color style.

WhatsApp further added that a set of new editing tools will automatically appear when a person captures or shares pictures and videos. The inapp camera will now have a “front-facing flash” for taking “perfect selfies” along with “convenient zooming feature” for video recording.

The features appear to be heavily inspired by Snapchat. Facebook and its subsidiary platforms have long been copying features that are inherent to Snapchat. Earlier this year, Facebook added the “Stories” feature, a slideshow of photos and videos that vanishes after 24 hours, to its photo sharing app Instagram. This was a blatant rip off of Snapchat’s hallmark feature of the same name. Recently, Facebook is testing new feature on its Messenger platform called Messenger Day that essentially mimics Snapchat’s “Stories”. Further, Messenger Codes is almost the same as Snapchat’s Snapcodes.  

Other “inspirations” include the now defunct Poke, Slingshot and Bolt, all toying with the idea of disappearing posts.

Will Facebook’s Imitation of Snapchat Prove Beneficial?

The question arises as to why Facebook, the world’s largest social media service, needs to imitate Snapchat? Snapchat is one of the most popular messaging and social media apps in the U.S. Launched in 2012, it is extremely popular with teens and millennials primary because of ephemerality. Photos/videos and text sent to friends via Snapchat disappear after sometime. Moreover, an interactive style of chat developed by the addition of stickers, doodling etc has really caught the fancy of teens.

Snapchat’s innovative ways have allowed it to move ahead of other popular apps like Twitter (TWTR - Free Report) and Facebook to become a favorite with teenagers. A key reason that can be attributed to Snapchat’s popularity is its “cool” quotient.  Snapchat scores above all social media services for being the coolest social network as users aren’t going to bump into their parents or worse, grandparents on the same network.

Notably, this particular group, teenagers, of the demography is most attractive to social media companies for the ad dollars they bring in.

Advertising is the mainstay of Facebook’s revenues. To boost its top line, the company is trying to lure this coveted group to all its platforms. Notably, Facebook has a habit of snapping up apps that help it to diversify its business. For example, it acquired WhatsApp and made a big splash in the mobile messaging space. In sync with the strategy, Facebook had tried to acquire Snapchat in 2013 but founder and CEO Evan Spiegel turned down the offer.

Since then, Snapchat has been offering some serious competition in terms of attracting teenagers/young adults to its platform. Consequently, Facebook has started to mimic Snapchat features so as to boost user growth and engagement levels. Per a Forbes analyst, Facebook can easily take chances by unveiling features that are similar to other social media services. This is because if these “inspired” features do not work, it can easily roll them back like it has done previously with Poke, Slingshot and Bolt. After all, platforms like Facebook, Instagram, WhatsApp and Messenger do have their own inherent features that will prevent it from losing users.

On the other hand, if the features become successful like Facebook Live, inspired heavily by Twitter’s Periscope, it can boost revenues considerably. Online video is the most lucrative component of digital advertising. As video ads generate more revenues than its photo and text-based counterparts, Facebook is trying to incorporate more and more video oriented content to bring in more ad dollars. 

Moreover, Tech Crunch observes that WhatsApp has huge worldwide adoption as reflected in its one billion plus user base. Snapchat with over 150 million users on the other hand is limited to U.S and Canada. If WhatsApp succeeds in making these features popular internationally, there are high chances of people viewing it as an “improvement to WhatsApp”. This will significantly cut down the risk of migration if Snapchat becomes popular going ahead. The report further adds “Good-enough features plus being the first app to offer them at scale in a market could succeed better than having the best features but showing up late.”

At present, Facebook carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the same space include Asure Software, Inc. (ASUR - Free Report) and LightInTheBox Holding Co., Ltd. (LITB - Free Report) .Both sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Estimates for both Asure Software and LightInTheBox have improved over the last 30 days. For the current year, estimates for Asure Software have gone up from 15 cents to 19 cents while for LightInTheBox the loss estimate has narrowed from 18 cents to a loss of 7 cents.

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