Shares of Snap were climbing over 12% in after-hours trading before they changed course on Tuesday.
The parent of the Snapchat app reported higher than expected revenue for the second quarter but its first ever daily drop in Snapchat users.
Revenue for the quarter was $262 million, while analysts had expected $250.43 million.
Daily Snapchat users had fallen to 188 million in the second quarter from 191 million in the prior quarter. Analysts on average expected the company to see a growth of nearly 2 million users in the second quarter from the first quarter.
According to CEO Evan Spiegel, the redesign of the Snapchat app was the primary reason for usage slipping, but he also credited the changes for increasing viewership of key ad-supported content this year.
“We believe that this is an important evolution of our product that will help drive future growth in engagement,” said Spiegel. “Our users continue to spend an average of over 30 minutes on Snapchat on a daily basis.”
It was also revealed that Saudi Arabia’s Prince Alwaleed bin Talal announced soon after the second-quarter results that he had finalized a $250 million deal back in May to buy a 2.3 percent stake in Snap.
Disclaimer: We have no position in Snap Inc. (NYSE: SNAP) and have not been compensated for this article.