Snapchat results show growth in users and revenue

12 August, 2017, 00:34 | Author: Sherri Guerrero
  • Snap shares plunge after earnings disappoint

The company reported ($2.31) earnings per share (EPS) for the quarter, missing the Zacks' consensus estimate of ($2.05) by $0.26.

Snapchat's daily active users rose to 173 million, compared with the 166 million reported in the previous quarter, but continues to trail many of its rivals. The Company's flagship product, Snapchat, is a camera application that helps people to communicate through short videos and images known as a Snap. (NYSE:SNAP) during the second quarter, according to its most recent filing with the Securities and Exchange Commission.

Snap reporter ARPU, or average revenue per user, of $1.05 on the quarter. Earlier this year, Snap began selling Spectacles to all us consumers via its website, and in June, it began selling the wearable in Europe via its website and vending machines as well.

While the key measure of daily active users (DAU) was up 4% for Q2, the app still lagged behind its expected growth in users. The stock price which was at a reasonably healthy $17 when the company went public in March has now tumbled below $14 and the sales of Snapchat Spectacles have started to dry up despite being available to buy in more places than ever.

The anemic growth renews investor concerns that the messaging platform is struggling to grow into a mainstream service in the face of fierce competition from Facebook.

Also weighing on Snap shares is the end of a six-month period in which employee-shareholders couldn't sell their stock.

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The most unique part of Snapchat is the "stories" feature and now that Facebook and Instagram have their own version of stories and it is a lot more successful than Snapchat is!

Yes, Snapchat is far from the only young company to have sentiment turn against it.

But Blau said growth doesn't necessarily have to be Snap's primary focus if the company is able to make money from the users it does attract. The pair's post-IPO lockup will expire Monday.

Until now. Facebook's Instagram Stories, a clear Snapchat clone, has more daily users than Snapchat itself — and parent company Snap Inc. should be very anxious. "We believe deeply in the long term success of Snap", Spiegel said.

Snap has not delivered on either front.

Excluding certain items, Snap lost 16 cents per share in the second quarter. Snaps are viewed primarily through the Snapchat application, but can also be embedded on the Web or on television in certain circumstances. Oppenheimer & Co. Inc. acquired a new stake in shares of Snap during the first quarter worth $369,000. Its confirmed acquisition of the ad company Placed will be reflected in its third-quarter financials, as that deal was closed in July. That seemed to suggest that Snap thinks it will eventually have opportunities to sell ads within the feature. An analyst asked Spiegel to specifically explain the so-called growth-hacking techniques - things like sending lots of push notifications that are created to boost app usage - he opposes. The analyst asked which types of techniques Spiegel didn't like.

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