Snap falls 17% as revenue and daily user growth disappoint

Snap falls 17% as revenue and daily user growth disappoint

Snap’s stock fell as much as 17 percent to $11.40 a share in after-hours trading after it said revenue rose 153 percent to $182 million while net profit nearly quadrupled to $443 million, or 16 cents a share. Analysts had been expecting $186 million in revenue and a net loss of 14 cents a share. But the metrics the company shared on both user activity and its ability to monetize them show Snap is still battling its way up a hill, where Facebook and Instagram are standing. Average daily users grew 21 percent to 173 million in the second quarter, below the 175 million that analysts polled by Factset had forecast. Rather, they show it’s taking longer for the company to deliver on the user engagement and revenue-generation that investors were hoping for when it went public. Instagram has 700 million DAU and the Instagram Stories feature has more than 250 million. After a rocky earnings report in the first quarter, the pressure was on Snap and Spiegel to turn things around in the second quarter. Headcount in the second quarter grew 10 percent to 2,600, down from the 27 percent growth rate in the previous quarter. “Snap is one of six platforms with over 150 daily active users outside of China. And investors are starting to wonder if it has enough time to get there.

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Image Credit: Snap

Not even the dancing hot dog can cheer up Snap’s cranky investors. Only a few minutes into Snap’s earnings call Thursday, Evan Spiegel mentioned the popular hot-dog filter his company introduced last month, saying it may be “the world’s first augmented-reality superstar.”

But it was too late. Even a beloved luminary like the breakdancing hot dog couldn’t undo the gloom that had already settled on Snap’s earnings report, which missed revenue and net loss estimates only slightly, but seemed to lead to another wave of disillusionment around the social-media company.

Snap’s stock fell as much as 17 percent to $11.40 a share in after-hours trading after it said revenue rose 153 percent to $182 million while net profit nearly quadrupled to $443 million, or 16 cents a share. Analysts had been expecting $186 million in revenue and a net loss of 14 cents a share. At its low point, Snap was trading 33 percent below its March IPO offering price.

Snap has proven proficient at rolling out innovative features, such as amusing filters or the Snap Map feature, which uses a map interface to locate snaps from one’s friends or those shared publicly around the world. But the metrics the company shared on both user activity and its ability to monetize them show Snap is still battling its way up a hill, where Facebook and Instagram are standing.

Average daily users grew 21 percent to 173 million in the…

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