Confirming earlier rumors Facebook Inc (FB) recently released Slingshot, a smartphone photo and video sharing app, which has been touted as a prospective competitor to Snapchat. The app is available on Apple’s (AAPL) iOS 7 and Google’s (GOOGL) Android.
Slingshot does not require a Facebook account to sign in, which will attract privacy-conscious users. Moreover, in order to interact with friends, a Slingshot user needs to be much more pro-active than other messaging services. The app requires a new user to first share one of his/her photo and video to unlock a friend’s content.
We believe that this requirement further improves privacy, as it gives users an option to not reciprocate to connections they wish to ignore. Users can swipe-away the photo or video message without unlocking it. They also need not worry about it later on due to the app’s self-destructive feature, very similar to Snapchat.
Facebook believes that the new app will attract users due to the creative opportunity it presents. The app has already received some rave reviews from users who have praised its innovative interface.
Although the app’s similarities to Snapchat is bound to face some criticism, we believe that Slingshot is a much better offering than Poke, which Facebook launched in 2012. Poke received flak for blindly imitating Snapchat, the primary reason behind its failure.
Poke’s failure forced Facebook to look into inorganic ways to expand into the growing private messaging segment. However, its $3.0 billion offer was rejected by Snapchat in Nov 2013. Snapchat stated that it would prefer to remain independent and wait for a better proposal until 2014.
Facebook’s interest in Snapchat was particularly due to its growing teenage user base. Snapchat’s attraction particularly among the teens remains is due to the privacy it provides (since it destroys the photos and videos instead of storing) that is elusive on the Facebook platform.
Slingshot, being an independent app, will provide significant competition to Snapchat in this regard. Facebook’s huge user base and scale will help Slingshot to expand without worrying about monetization, unlike its competitors like Snapchat.
Facebook is aiming at building a mobile eco-system surrounding its social network. The aim is to offer every possible service and product on mobile to users around the world. Internet.org, WhatsApp and Oculus VR are some of the pillars of this growth strategy.
However, these three pillars are more long term focused. The new Slingshot app and fast growing Instagram are expected to drive Facebook’s ad revenues in the near term. However, intensifying competition from Google and Twitter (TWTR) remains a major headwind.
Currently, Facebook has a Zacks Rank #2 (Buy).
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