Spooked investors send Snap shares spiraling

Kelley Robertson
August 12, 2017

Snap said second-quarter revenue rose 153% to $181.7 million, as it posted another loss at 16 cents a share, with both revenue and earnings missing the consensus estimate of analysts. The Company's flagship product, Snapchat, is a camera application that helps people to communicate through short videos and images known as a Snap. And the company's net loss ballooned to $443 million, compared to $116 million at the same time previous year.

Average revenue per user (ARPU) was $1.05, an increase of 109% over the second quarter of past year when ARPU was $0.50. The slowdown in user growth comes as larger rival Facebook continues to copy Snap's best features, rolling them out to its user base of over 2 billion users across various properties.

Snapchat revenue and user growth were lower than expected.

The firm had 173 million active daily users, up 4% on the prior quarter. Cantor Fitzgerald raised shares of Snap from an "underweight" rating to a "neutral" rating and cut their target price for the company from $18.00 to $17.00 in a report on Thursday, May 11th. Investors have anxious that the app maker won't be able to grow its ad business in the face of mounting competition from Facebook.

Opening the door to more volatility, Snap employees on Monday will be permitted to sell shares for the first time since the IPO, in the second expiration of restrictions on sales by certain shareholders. "However, user growth looks grim for Snapchat, which has seen stagnant growth in recent quarters since Instagram launched a copycat "Stories" feature".

Additionally, Spiegel said the company is working to stabilize the backend infrastructure of Snapchat's Android app. Loop Capital reiterated a "hold" rating and set a $21.00 target price on shares of Snap in a research report on Thursday, April 6th.

Snap Inc, formerly Snapchat, Inc, is a camera company. Investors have been anxious about the volatility of the stock, with a post-IPO ban on employees selling shares expiring on Monday.

SAN FRANCISCO Ever since Snap, the maker of the messaging app Snapchat, went public in March, the company has become a closely watched barometer for Silicon Valley and Wall Street.


With sentiment at such ghastly levels, and our view that Snap can monetize its unique position with millennials, we believe the stock is in a bottoming process.

Chief Strategy Officer Imran Khan said that 60% of Snap ads are now delivered programmatically.

The Snap Inc. logo appears on a screen above a trading post on the floor of the New York Stock Exchange on August 7, 2017. Its confirmed acquisition of the ad company Placed will be reflected in its third-quarter financials, as that deal was closed in July.

While Snapchat sends fewer notifications, it encourages daily use through Snapstreak, which calls out streaks in which two friends send each other snaps at least once for more than three consecutive days.

There was a cringe-worthy moment to finish the call.

A Lithuanian court says a businessman suspected of tricking more than $100 million out of Google and Facebook in an elaborate cybercrime case should be extradited to the United States.

"If that's how (Spiegel) wants to play his cards that's fine, but there's going to be a trade off", said Jason Moser, analyst for Motley Fool.

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