Snapchat shares hit new lows after results disappoint Wall Street investors
Shares of Snapchat parent Snap sank to new lows on Thursday after the company reported a hefty quarterly loss and user growth which missed Wall Street expectations.
Revenue at the California-based company more than doubled to US$182 million while its loss soared to US$443 million in the quarter that ended June 30, according to an earnings release.
Snap reported a loss of US$116 million in the same quarter last year.
Meanwhile, the average number of people using the vanishing message service Snapchat daily rose 21 per cent to 173 million when compared to the same period a year earlier, but missed on market expectations the rank of users would grow to 175 million.
Snap shares plunged more than 12.5 per cent to US$12.02, touching new lows before gaining back ground, in after-hours trading in New York.
Snap shares have been trending down for several months, with Morgan Stanley analyst Brian Nowak putting out word that Snapchat advertising products were not catching on as quickly as had been expected.
Nowak said Snapchat is also facing tougher competition from Facebook-owned Instagram, which has been offering similar services.
Snap was the largest IPO (initial public offering) of 2017 and rose more than 40 per cent from initial trades to give it a market value of some US$34 billion, but the recent slide has cut its valuation by more than half.
Snapchat became popular among young smartphone users for its disappearing messages, often photos or video but analysts say it needs to show strong growth to keep pace in the rapidly evolving social media sector dominated by Facebook.
Although Snapchat is best known for its smartphone messaging, it has also developed partnerships with numerous media outlets eager to reach its audience with news, video and other content.