Tech analyst Dan Ives explains why investors are frightened so easily by tweets from celebrities like RiRi and Kylie Jenner
We all know that Rihanna is an extremely powerful woman. However, in the days after the uncomfortable “Slap Rihanna or punch Chris Brown” Snapchat scandal it’s become clear just how valuable her (dis)approval really is.
Fans took to social media to criticise the animated ad that trivialised domestic violence and the star quickly followed suit. “This isn’t about my personal feelings because I don’t have much of them,” she wrote on Instagram. “But all the women, children, and men that have been victims of DV in the past and especially the ones who haven't made it out yet...You let us down! Throw the whole app-oligy (sic) away.”
It has dealt a heavy blow to the company’s market value, with stocks plunging by close to $1 billion after the star’s public critique. This isn’t the first instance of an economic nosedive for Snap following a celebrity remark. On 21 February, Kylie Jenner tweeted a seemingly innocuous tweet that she was, like, so over Snapchat. “sooo does anyone else not open Snapchat anymore? Or is it just me…,” she asked, before adding: “Ugh this is so sad.” As one of the most prolific Snappers, her tweet also ate away at the company’s value.
Seasoned Wall Street tech analyst Dan Ives explained how celebrity opinions have put the company’s finances in crisis. “When the Kylie Jenner tweet came out, just given her influence, that took a billion plus off the market value because to 11-24-year-olds these celebrities are role models.”
“Investors are very jittery around Snap,” Ives said. After the app’s redesign, over a million users signed a petition begging the company to undo the update. Backlash from its core users did very little to calm nerves on Wall Street. “Snap's nothing without their users, so public outrage significantly influences the stock, because for Snapchat and Instagram approval, especially from celebrities is a major ingredient to the success.”
He added: “This whole thing has been a one-two punch with Kylie Jenner and then Rihanna. (Rihanna) has 60 million Instagram followers. That is not the news investors want to hear right now. Look at it as the straw that broke the camel’s back.”
Unfortunately for Snapchat, rebuilding its reputation won’t be as simple as paying an influencer to tweet favourable things. “Usually celebrities don't really have the same power to boost like a silver bullet. It's usually more gradual. It looks like only negative comments impact the stocks.”