Snap Inc., the parent company of the popular social media platform Snapchat, is reportedly testing a premium subscription service that will give users access to certain features as part of its latest effort to keep monetizing its large user base.

This privileged tier has been named Snapchat Plus and it is currently in an early stage of internal testing, a spokesperson for the company told The Verge earlier today.

Sources within the tech space have mentioned some of the features that will be incorporated into the service including access to exclusive icons, the possibility to know the whereabouts of the user’s friends, and how many of them have rewatched published stories.

The company did not confirm how much the service would cost but sources state that it could be around $5 per month or $50 a year.

Paid subscriptions within social media platforms are one of the latest trends sweeping the space. In September last year, Twitter pioneered its way into this practice by introducing Super Follows, a program that compensates top creators for attracting members by granting them access to exclusive content.

Also Read: How to Be Successful on TikTok?

Instagram and TikTok have also created similar programs but they have not gained that much traction. However, efforts continue to be poured into developing this income source at a point when the global economy may be entering a recessionary period that could lead to lower advertising revenues in the near term

Snap’s Growth in North America Stalls

During the first quarter of 2022, Snap managed to increase its average daily active users by 13 million compared to the previous quarter and 18% compared to the same period a year ago.

However, the company’s ability to add more users in North America has remained relatively stalled as only 1 million of that total came from this region. Meanwhile, 2 million new users came from Europe while the remaining 10 million came from other corners of the world.

snap average revenues per user q1 2022
Snap Q1 2022 ARPUs – Source: Q1 2022 Earnings Report

This has been a key issue for the company’s revenue growth as North American users are the most profitable in terms of their revenue-generation capacity. According to this recent report, users within this region brought $7.77 in revenues during the quarter on average compared to $1.93 for European users and $0.95 for users within the rest of the world.

Snap (SNAP) Has Performed Terribly Compared to Sectorial Benchmarks

Snapchat’s stock price has nosedived this year as shares currently accumulate a 73.4% loss since the year started. During this same period, the tech-heavy Nasdaq 100 index is booking a 31% loss. The wide gap between SNAP and this broad-market benchmark emphasizes the market’s pessimistic expectations about the company’s prospects.

A risk-off attitude has dominated the stock market for most of the year due to concerns associated with higher inflationary pressures and its resulting impact on the Federal Reserve’s monetary policy.

On 24 May, shares plummeted by 41% in a single day after the company said that it will likely miss its projections for the second quarter of the 2022 fiscal year amid a “faster-than-anticipated” deterioration of the macroeconomic environment.

During the first quarter of the year, the company reported a large net loss of $3s60 million representing 34% of its revenues as marketing and R&D expenditures climbed significantly compared to previous periods.

In this last quarter, the firm’s adjusted cost of revenue climbed to 39% compared to 34% the firm reported the previous quarter while adjusted operating expenses accounted for 55% of its revenues compared to 41% in Q4 2021 and 48% in Q1 2021.

However, the firm still managed to produce positive operating free cash flows of $127 million while it reported liquid reserves of nearly $5 billion.

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