Snap Inc. Shares Drop 20 Percent After Hours On Slow Growth Numbers


 
 
10:09 11/07/2017

A redesign is in the pipeline for Snap Inc. SNAP  app after it reported slower user growth than Wall Street expected. Its shares were down as much as 20 percent after hours on this news.

The company reported third-quarter net loss of $443 million, or a loss of 36 cents a share, compared to a loss of $124.2 million, or 15 cents a share, a year ago. Revenue rose to $207.9 million from $128.2 million a year ago. Analysts had estimated a loss of 33 cents a share on revenue of $236 million. For the fourth quarter, analysts model losses of 31 cents a share on revenue of $306.1 million. The company said that the average cost of its ads dropped by 60% as the Snapchat parent company transitions its ad-buying to a self-serve system that can better compete with Facebook Inc. and Alphabet Inc.

Snap's user growth in the last three months was about half what investment analysts expected. Daily active users rose to 178 million in the third quarter from 173 million in the second quarter. Analysts had expected 181.8 million, according to research firm FactSet.

Chief Executive Evan Spiegel said the company was launching the redesign after hearing for years that Snapchat was difficult to understand or hard to use.



Snap executives said that more than 80% of its ads are delivered via its auction-based ad system, which it launched less than a year ago. As ad prices sunk, Chief Executive Evan Spiegel highlighted the greater quantity the process brings, saying that the company added nearly five times the number of buys from the beginning of the quarter, increasing the number of ads Snap served by 400% from the year-earlier period.



Snap stock has dropped 34% in the last six months.


This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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