Snapchat stock pops despite drop of 3 million users

08 Agosto, 2018, 09:23 | Author: Arnold Perez
  • Snapchat parent Snap is expected to report second-quarter earnings on Tuesday

The platform has been under pressure from Facebook's line-up of apps, which have aggressively competed with Snapchat for millennial social media users in recent years. It reported an adjusted loss of 14 cents a share, which was better than the average analyst expectations of a 17 cents a share loss, according to surveys by Thomson Reuters.

But the share prices gave up much of those gains soon after, as the news sunk in that the company's user base wasn't growing as expected, with Snapchat losing daily active users quarter-over-quarter for the first time in its history.

Features that many used on a daily basis were moved to different parts of the app, causing confusion among its loyal users.

The company behind Snapchat posted revenue of $262.3 million in the period, also topping the estimate of $247.2 million.

"It has been approximately six months since we broadly rolled out the redesign of our application, and we have been working hard to iterate and improve Snapchat based on the feedback from our community", CEO Evan Spiegel said on a call with investors.

That's after the company reported the slowest user growth ever in May.

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There was a small silver lining, too.

The company has struggled with a rocky redesign widely criticized by users.

The Los Angeles-area company beat Wall Street's expectations for both revenue and losses, and its share price surged by more than 13% on the news in after-hours trading to almost $15, before briefly stabilizing around $14 - an overall gain of about 6%.

"Snap has a major app redesign in process which remains one of the linchpins for future success and monetization, although it has encountered clear speed bumps on this front", said Daniel Ives, chief strategy officer at GBH Insights.

Even before its earnings report, news shot around the internet that the social network had failed to properly lock down its iOS app, leaking portions of the source code to its app. Facebook suffered the single biggest wipeout in stock market history following its earnings report. He made the $250 million investment on May 25. Saudi investor Prince Al-Waleed bin Talal, whose investing firm owns stakes in Twitter and the Four Seasons hotel chain, said in a tweet that he'd purchased about $250 million worth of the company's shares.

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