Shares of Snap, the parent company of Snapchat, fell over 15% on Tuesday after the company reported disappointing earnings along with also user growth inside the third quarter.
The company’s revenue of $208 million, while a 62% jump by the third quarter of 2016, was well short of the $235.5 million analysts had expected. The company’s number of average daily users grew only 17% to 178 million, which was below the 180.5 million figure in which analysts polled by Bloomberg had predicted.
the item wasn’t just the user along with also financial metrics in which were disappointing: The earnings report confirmed in which Snap’s video-recording glasses, called Spectacles, were something of a flop. The company took a $40 million charge by “excess inventory reserves along with also inventory purchase commitment cancellation charges.” In plain English, fewer people bought them than expected.
Snap reported a larger net loss than the item did a year ago, losing $443 million, compared with $124 million in its previous third quarter. The company’s net loss isn’t expanding quarter to quarter, however: the item lost around $443 million inside the second quarter.
The poor earnings report will be another signpost on the rough road the company has walked since going public in March. Snap has struggled to grow as quickly as the item had hoped along with also to compete against Instagram’s very similar Stories product. Stories, as well as WhatsApp Status, hit the 300 million daily active user milestone earlier This specific month, Facebook, which owns both services, said.
Evan Spiegel, the cofounder along with also chief executive of Snap, acknowledged the difficulty some completely new users have with the app.
“One thing in which we have heard in the past will be in which Snapchat will be difficult to understand or hard to use, along with also our team has been working on responding to This specific feedback,” Spiegel said in prepared remarks released by the company.
Spiegel said in which in response, the company might overhaul its app in a bid to draw in completely new users. “We are currently redesigning our application to make the item easier to use. There will be a strong likelihood in which the redesign of our application will be disruptive to our business inside the short term, along with also we don’t yet know how the behavior of our community will change when they begin to use our updated application.”
Snap’s shares were originally priced at $17 per share, before skyrocketing to $24 on their first day of trading. however the shares haven’t closed above $20 since June, along with also in after-hours trading Tuesday, sank to $12.41. The shares closed at $15.12 today before the company reported its earnings.
Matthew Zeitlin will be a business reporter for BuzzFeed News along with also will be based in completely new York. Zeitlin reports on Wall Street along with also big banks.
Contact Matthew Zeitlin at email@example.com.
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