Snap Shares Plummet After Tech Company Misses Expectations

Snap Grows Daily Users to 173 Million, But Delivers Disappointing Earnings

Making a bad situation worse, Snap failed to meet analyst expectations for the second straight quarter.

The closely watched daily active user (DAU) count rose by 7 million sequentially and 30 million annually to 173 million, falling slightly short of a 174.6 million consensus.

Investors in Facebook, Twitter and now Snap care tremendously about user growth.

A share lock-up which expires this weekend could provide further misery for Snap and its CEO Evan Spiegel as tied-up investors get an opportunity to get out, Financial Spreads founder Adam Jepsen said.

Its losses for the quarter ballooned to $443 million, a almost fourfold increase from the same period a year earlier and worse than investors had expected. But the company has struggled to convince Wall Street that it can outmaneuver Instagram or that it can become a viable advertising destination to rival Facebook and Google's dominance on the Web. It lost US$443-million in Q2 2017 alone, compared to Q2 2016's loss of just over US$155-million.

"(NYSE:SNAP) Posts Earnings Results, Beats Expectations By $0.13 EPS" was originally posted by Sports Perspectives and is owned by of Sports Perspectives.

Analysts such as Ralph Schackart at William Blair have suggested investors should wait it out as Snap captures more interest. But the metrics the company shared on both user activity and its ability to monetize them show Snap is still battling its way up a hill, where Facebook and Instagram are standing. The company reported ($2.31) earnings per share for the quarter, missing the Zacks' consensus estimate of ($2.05) by $0.26. In an anniversary post for Instagram, the app listed Puppy Ears as its most popular face filter - you know, exactly like the one that helped make Snapchat so popular. Moffett Nathanson reaffirmed a "sell" rating on shares of Snap in a report on Friday, March 31st. Spiegel said this plan creates a cycle where users create and view more snaps.

Snap generated 142% more revenue during the first half of 2017 than the first half of 2016 from advertisers who bought an ad during that span past year. "Snap has tremendous potential if it can capitalize on the opportunity in front of it as an alternative platform for advertisers", but the company is "under pressure from multiple fronts".

Snap has moved toward self-serve, auction-based ad sales, which Chief Financial Officer Andrew Vollero admitted in prepared remarks had dragged down the average price it commands for ads.

"We've defended Snap since day one, but now need to see monetization moving in the right direction", Cakmak said.

During the second quarter, Snap announced&nb sp;a two-year content-development deal with Time Warner. The company is also improving its ad measurement and analytics. Snap is new to placing ads in World Lenses, the 3-D, digital sketches that include the Internet celebrity known as Dancing Hot Dog. The "dancing hot dog" was released around July Fourth and captured the attention of the internet while also showcasing Snapchat's latest visual technology. Of note though, Verto only picked up a 13.2% sequential increase in users.

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