Shares of Snap Inc. (NYSE:SNAP) were down 16.94% at the bottom of the noon hour on November 8th. The company released its third-quarter results on November 7th.
The company missed expectations across the board. Revenue was posted at $207.9 million compared to $236.9 million expected, daily active users (DAUs) was 178 million versus 181.8 million expected. It posted a net loss of $443.2 million or $0.36 per share. Snap was also forced to write off a $40 million loss due to its new Spectacles underperforming.
Snap stock has dropped 48% since its initial public offering on March 2nd. The company is losing ground to Facebook Inc. and Instagram, and its leadership is looking for ways to dig out of its current hole. In response, the Snapchat application will be redesigned in order to appeal to a broader user base. Chief executive officer Evan Spiegel said that there could be an adjustment period but that the risk is necessary.
Part of this transformation will be the construction of an algorithm that will show personalized stories for each user. The original friend-focused design of the application will remain, but the hope is that broader content exposure will help to bring in advertising revenue.
Snap is an extremely risky play even at its current price. Twitter Inc. (NYSE:TWTR) also surged after its initial public offering but has since experienced a steady decline due to difficulties with monetizing its platform. Snap faces a serious challenge due to the direct competition from story platforms like Instagram and Facebook.
