Snapchat user growth declines 4 straight quarters and produces less than expected results in its first two earnings reports.
What does this mean?
Snap’s IPO price was $17 per share and jumped to $24 when trading started on the open market March 2, 2017.
On day two the stock closes at $27.09 and has since slipped to $13.77 as of August 10, 2017. That’s close to a 50% loss in value. Share prices fell roughly 13% yesterday with Snap’s latest announcement of poor results.
Financial analysts and investors are not excited with Snap’s performance.
Being hyped as one of the biggest tech IPOs in history and the biggest originating from Silicon Beach it has been a disappointment.
Snapchat once thought as capable of taking on tech giants like Google and Facebook. Now comparing Facebook’s addition of 50 million users this quarter to Snap’s addition of only 8 million is worrisome to insiders.
As Facebook, Instagram and Whatsapp continually upgrade their platforms and offer features similar to Snapchat you will continue to see a decline in Snap’s value.
Snapchat user growth has declined 4 straight quarters for Snap as well as 4 straight quarters of declining revenue per user on the platform.
Since launching in 2011, the second quarter of 2016 has been the only quarter when revenue exceeded their losses. Every other quarter losses have exceeded revenue.
Evan Spiegel, Snap’s Chief Executive continues to tell analysts the company has made great progress and continues to improve through innovation, even though Snap is typically last to market.
Forecast losses by analysts were projected at $367 million and actuals totaled more around $443 million. A major increase when compared to losses of $115 million from the same period last year. Projections for revenue also missed and came in short at $182 million based on a forecast of $186 million.
Monday August 14th represents the first opportunity Snap employees become eligible to sell shares of stock they hold. A massive sell off will drive the price further down although unlikely since many probably would not profit from such a transaction.