Shares of Snap Inc. (NYSE:SNAP) were down double digits as trading opened on Friday, August 11. The company released its second quarter earnings after close on August 10. Snap added 7.3 million daily users for a total of 173 million – representing a 4.2% growth rate which was lower than the 5% posted in the first quarter. Snap disappointed on revenues of $181.6 million reporting a loss of $0.16 per share, this missed estimates of $185 million and losses of $0.14 per share. Snap’s Spectacles sunglasses sold around 42,000, a decline of 35% compared to Q1 even after expansion into Europe and into major retail giants like Amazon and Harrod’s.
The company lost $443 million in the second quarter, up from the $116 million in the second quarter of 2016. Snap has made major investments in sales and marketing – surging expenses could open the possibility of a $1 billion loss if the next two quarters do not show improvement. As of 11AM on Friday morning Snap Inc. is trading at $12.28 – down 10.49%. The stock has now fallen 50% since its initial public offering, biting investors who bet on the social media darling in early March.
Snap Inc. may not have to look at shifting its overall strategy. Direct competitors in Instagram Stories and Whatsup Status both have reached 250 million user each, beating the Snapchat user base. The stock now faces the very real possibility of plunging into the single digits before the end of this year.
