Snap Earnings: Shares Soar, Then Dip, After Q2 Beat

Ivan Schwartz
August 9, 2018

The group reported a loss of 3m daily active users in its second quarter results, contributing to a net loss for Snap of $353m.

On the upside, the company reported second quarter revenues of $262.3m against analyst estimates of $249.8m, up 44% over the same period a year ago, and a loss of $0.14 earnings per share against a loss estimate of $0.18.

Snap Inc hasn't been doing great, to say the least. Its shares are down almost 10% for the year, as of Tuesday morning, while Facebook (FB) stock is up 5% despite a quarterly bloodbath last month.

Loss per share: 14 cents a share, whereas Thomson Reuters consensus estimate as 17 cents loss per share.

Snapchat has more than 100 million monthly active users, the company said, even though that was typically a metric it never cared about.

Snapchat was forced to redesign the new look, but not before it started to experience a decline in users at the end of the first quarter, which continued into the latest quarter.

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"We feel that we have now addressed the biggest frustrations we've heard and are eager to make more progress on the tremendous opportunity we now have to show more of the right content to the right people", CEO Evan Spiegel said of the company's subsequent attempts to walk back some of the more unpopular aspects of Snapchat's redesign.

But some analysts on Tuesday brushed off Snap's user drop, saying that Snapchat always had more limited appeal than larger rivals. Revenues were also better than anticipated, coming in at $262 million where analysts had expected $250 million.

Snap lost about 1 million users in each of its three geographic reporting regions: North America, Europe and rest of world.

Snap is battling for relevance against Facebook-owned Instagram, and many analysts had expected active daily user numbers to be flat. Snap in first-quarter results said it would again adjust how it presents content.

"It's always going to be a niche platform, so the modest change isn't very remarkable", said Pivotal Research's Brian Wieser. Chief Executive Officer Evan Spiegel defended his strategy, saying that while the redesign was the primary reason for fewer daily users, "we believe that this is an important evolution of our product that will help drive future growth in engagement", according to his prepared remarks.

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