Snap Shares Fall as Company Misses User Growth Expectations

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Snap Inc., the parent company of Snapchat reported its second quarter financial results this week and saw shares falling after disappointing on user growth.

For the second quarter, the company posted a loss of 9 cents per share for the three months ending in June. This was in-line with Street estimates. Revenues for the quarter were $454 million, a growth of 17% from the same period last year.

Daily active users on the app rose by 9 million over the quarter which took the company’s total to 238 million, a 17% improvement from last year. It was unfortunately short of analysts’ estimates. Analysts had expected 238.44 million, according to IBES data from Refinitiv.

“Despite the unusual circumstances influencing user growth in the quarter, we were pleased with the overall level of growth and that growth continued month over month from April to May, and May to June,” CFO Derek Andersen stated. “The operating environment has remained challenging as COVID-19 continues to impact macroeconomic conditions and the businesses of our advertising clients. Many of our advertisers have seen interruptions in their businesses, especially those that rely on in-person interaction with their customers.”

“In addition, many advertisers paused spending for periods of time during the quarter in order to swap out their ad creative for messaging that was more appropriate for the given moment,” he added. “These challenging circumstances interrupted otherwise robust momentum in our self-serve platform.”

“The growing focus on brand safety and privacy across the entire industry places us in a unique position of strength as we have invested in these areas from the beginning of our business,” Snap Chief Executive Evan Spiegel said during an earnings call with analysts.

Looking ahead the company has forecast 242 million to 244 million daily active users in the current quarter. This is below analysts’ target of 244.82 million according to Refinitiv data.

Shares of Snap fell 11% in after-hours trading on Wednesday before paring losses to around 6%.

Disclaimer: We have no position in Snap Inc. (NYSE: SNAP) and have not been compensated for this article.

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