Photo: AP
Earlier this year, Snapchat owner Snap Inc. saw its stock plummet after a brutal first-quarter report that saw it come in over $13 million short of $244 million earnings expectations. Spoiler alert: The pain is not stopping.
Per Bloomberg, shares in Snap Inc. are entering freefall again after the company’s stock had just began to recover in June. Analysts observed Snapchat’s failure to grow its userbase or generate ad revenue, which is obviously bad for its long-term prospects, Bloomberg wrote:
Snap has fallen 8.1 percent over the past two trading days, the worst performer in the S&P Software & Services Select Industry Index over the period. That’s come as analysts at Needham and Cowen sharply cut their outlooks for Snap, which has struggled to maintain user and advertising growth amid a battle for market share with Facebook Inc., which has repeatedly mimicked Snapchat’s app features.
Snap fell to $12.91 per share as of 1:36 p.m. in New York, down from its $14.05 closing price on Monday.
Despite Snapchat’s decision to reverse course on key aspects of a redesign hated by many of its core users, engagement is still going down. (Thanks, Kylie Jenner.) According to CNBC, a Cowen analyst wrote, “Per our recent ad buyer survey, SNAP was lowest Social platform in key attributes like ROI, data and user targeting.”
Another Needham & Co. analyst wrote that there was a “dramatic slowdown” in the amount brands were spending on the company’s products, Bloomberg wrote, leading her to cut 15 percent off revenue forecasts for the second quarter and Snap to continue losing value.
Stock stood at $12.80 after close late Wednesday night. It’s not quite fair to compare this to Snap’s all-time high of $29.44 right after its IPO, and it’s not back down to its recent low of $10.55 yet, but it’s… Not good at all.
Snapchat has struggled as competitors like Facebook-owned Instagram continue to steal many of its core features, it reportedly plans to continue blowing huge amounts of money on proven bad bets like Spectacles, and recent reports have not been flattering for leadership. In 2016, Snap Inc. lost $514.6 million, and in 2017, it lost $350 million—which is improvement, but of the type akin to a mortal wound getting bandaged too late.
In March, even Snap predicted a rough second quarter for 2018. In April, Snapchat started inserting unskippable ads into its feeds, which could start generating new revenue but risks pissing off users after it already borked the redesign. Finally, in late May yet more accounts of a company culture that continues to indulge in some of the worst tech-bro stereotypes emerged.
To the extent there is a silver lining, recent polling showed 69 percent (nice) of Americans between the ages of 13-17 are using Snapchat, with 35 percent saying they use it the most. But is there any reason to doubt it is still fucked? Despite prices near rock-bottom, Bloomberg wrote, just six of 34 analysts rated Snap Inc. as a buy.
[Bloomberg]