Snap Jumps After Earnings Beat, Solid Overall Financials

Gladys Abbott
August 9, 2018

Second-quarter daily average users fell 2 per cent from the previous period to 188 million, missing the average analyst estimate of 193 million.

The news was revealed in Snap's quarterly earnings, and the company may survive for a while longer - the company has been able to extract more money from their fading user population, earning $262 million in revenue, but still making a $353 million loss. Critics in the past have anxious about Snap keeping user engagement up, keeping the users coming back and keeping them using the application, which is declining in some areas while growing in others, leading investors to boost the stock up in after hours trading although it has since levelled back to around the closing price.

This appeared to confuse the market initially, who rallied behind Snap's share price initially in after-hours trading, but it seems likely this will only be a temporary reprieve before the company gets purchased by AOL, like all eventually defunct web brands.

The Venice, California-based company said it had a loss of 27 cents per share.

Snap said Tuesday that third-quarter revenue would be $265 million to $290 million. The company, which just marked the two-year anniversary of its own version of Stories, recently announced it had crossed 1 billion users.

Evan Spiegel said Snap does consider users' feedback: "We feel that we have now addressed the biggest frustrations we've heard, and are eager to make more progress on the tremendous opportunity we now have to show more of the right content to the right people".

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The deal comes as Snap posted second-quarter earnings on Tuesday that showed Snapchat had lost users. Last quarter, its stock dropped by as much as 24% after releasing its Q1 earnings report.

"It's always going to be a niche platform, so the modest change isn't very remarkable", said Pivotal Research's Brian Wieser.

Snap has been working to convince big advertisers to spend more of their budgets on Snapchat ads and reach the app's base of mainly 18-34-year-old users, and it beat analyst revenue forecasts as it drew in more global and small business advertisers.

The prince had previously been rumoured to be interested in investing in Snap prior to its IPO, though in 2015 a source told Reuters there were "no plans to invest".

Snapchat users spend 30 minutes per day on average using the app, and generated over 3 billion snaps per day. Investors will also applaud the company for offering explicit guidance for the first time.

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