Snap Inc (NYSE:SNAP) released its quarterly results on Tuesday, which yet again failed to impress investors. A redesign to its popular app hasn’t paid off as revenues of $230.7 million came in below the $244.5 million that was expected by analysts. Although it’s a strong 54% increase from a year ago, it was not enough to keep the stock falling 16% in after-hours trading.
In addition to disappointing sales growth, its daily active user growth was also underwhelming as the company finished with 191 million users, short of the 194 million users that analysts were expecting.
Snap CEO Evan Spiegel attempted to downplay the impact of the stock’s redesign, stating that "As we have mentioned on our past two earnings calls, a change this big to existing behavior comes with some disruption."
We could see a big sell-off on Wednesday as after-hours trading has the share price closing in on the stock’s 52-week low. Since listing on the NYSE more than a year ago, Snap has struggled to generate much positivity and it is down around 35% in just the past 12 months.
Over the long term there are serious questions about Snap’s future and whether it will be able to contend with big-name competitors like Facebook, Inc. (NASDAQ:FB), which looks to replicate some of Snap’s key features.
At around six times its book value, Snap is traded at a big premium and although it is continuing to grow its top line, there’s little reason to expect the stock to pull itself out of this hole anytime soon.
