Snap's shares fizzle out as its user growth falters

by Garry Watts August 12, 2017, 0:09
Snap's shares fizzle out as its user growth falters

The user base grew by 21 percent over the past year to 173 million, which was slower than analysts had expected.

Snap is expected to report revenue of $185.7 million, that's about $35 million more than its last report, with an earnings per share loss of $0.15 (or GAAP earnings of -$0.33).

But it wasn't all bad news.

Revenue meanwhile more than doubled to $181 million, though it was still below analysts expectations of $186 million. 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.

Snap, the owner of messaging app Snapchat, has reported a second-quarter loss of $443m (£341m), up significantly from the $116m loss it posted in the same period of a year ago. Instagram now has almost 700 million users globally. It lost US$443-million in Q2 2017 alone, compared to Q2 2016's loss of just over US$155-million. For example, the Snapchat app works more like a messaging product with a curated media section - it doesn't have a feed with ads slotted in like Facebook's namesake network and its Instagram app The company isn't focused on getting as big as possible, like Facebook.

Also weighing on the stock: Employees will also be able to sell their shares on the public market for the first time next week, presenting an ultimate test of confidence in the company. "(NYSE:SNAP) Shares Bought by NN Investment Partners Holdings N.V." was originally posted by Markets Daily and is owned by of Markets Daily.

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Even a dancing hot dog can't get people excited about Snapchat again.

The dancing hot dog that Spiegel called the world's "first augmented reality superstar" was viewed more than 1.5 billion times on Snapchat, plus tons more as it was made into viral memes shared around the web.

Recent options transactions imply traders expect a 15 percent one-day swing for the stock in either direction following the quarterly results.

Uber Technologies Inc. faced a fresh round of turmoil Thursday, with its chief of global operations resigning and investors suing the company's former CEO. Instagram began mimicking Snapchat's key features previous year and boasts a much larger following - 250 million people daily use Instagram Stories, a feature developed by Snapchat that allows users to post disappearing pictures and videos for a 24 hour period.

"Given the amount of speculation around the lock-up expiration, I feel it is important to note that Bobby and I will not sell any of our shares this year", Spiegel said on a call with analysts. Investors have been anxious about the volatility of the stock, with a post-IPO ban on employees selling shares expiring on Monday.

Although that's an easy way to grow daily users quickly, Spiegel said, Snap doesn't believe "those sorts of techniques are very sustainable over the long-term". Snap's "other" revenue, which is largely comprised of Spectacles sales, was only $5.4 million, down from $8.3 million in the first quarter. Snap's quarterly revenue was up 153.1% compared to the same quarter a year ago.


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