Snap Inc (NYSE:SNAP) saw its share price tumble more than 17% after hours as the company’s third-quarter earnings disappointed investors.
Although the company’s net loss of $0.14 per share was not as bad as the $0.15 loss that was expected, sales of $207.9 million fell well short of the $236.9 million that was expected by analysts. The company saw its daily active users rise from 173 million last quarter up to 178 million in Q3, but fell short of the 181.8 million that was expected.
The company incurred nearly $40 million in costs on its Spectacles, which are essentially sunglasses with a camera attached to them. Despite selling over 150,000 as claimed by the company’s CEO, the company still had thousands left sitting unsold in inventory and in its release stated that the costs were “primarily related to excess inventory reserves and inventory purchase commitment cancellation charges.”
Snap has been on a rough ride this year and although it initially saw a bump in price after its IPO, the stock has been on a downward spiral ever since. Year-to-date the share price has lost 38% of its value but in the past three months it has risen 13%. However, this latest tumble will likely result in the share going back on the decline.
Snap is in a very competitive industry and with nothing proprietary about its business it faces a big risk that tech giants Facebook Inc (NASDAQ:FB) and Alphabet Inc (NASDAQ:GOOG) will be able to lure away its users with similar features.
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