Snap sees users drop for first time in Q2; sales beat estimates

Snap will report quarterly results today Facebook and Twitter’s debacles cast a shadow

A sign with a Snapchat logo hangs on the front of the New York Stock Exchange in 2016

Saudi Arabia's Prince Alwaleed bin Talal has bought a 2.3% stake in Snap - the company behind Snapchat - for $250m (£193m).

On Tuesday the messaging app's parent company, Snap Inc., reported its Q2 2018 earnings, and it included its first-ever decline in daily active users following a highly controversial decline.

Shares of Snap initially dropped, then jumped as high as $14.90 in extended trading following the report, after climbing less than 1 percent to $13.12 in NY.

The company behind Snapchat posted revenue of $262.3 million in the period, also topping the estimate of $247.2 million. The stock price is now $13.12 per share.

On Thursday, the businessman announced a $267 million deal to buy newly issued shares in the Dutch music streaming service Deezer through his Kingdom Holding investment company and Rotana Group, the entertainment company he also owns. Snap had never before logged a quarterly drop in daily users, according to data it has released going back to 2014.

Average revenue per user (ARPU) increased 34 percent from the second quarter of 2017.

Snap Inc CEO Evan Spiegel said on a call with investors, "It has been approximately six months since we broadly rolled out the redesign of our application, and we have been working hard to iterate and improve Snapchat based on the feedback from our community".

Analysts on average expected Snap to gain almost 2 million users in the second quarter from the first.

Analysts had expected net losses of $0.17 per share in revenue of $251.19 million. Last quarter, its stock dropped by as much as 24% after releasing its Q1 earnings report.

"On the positive side, Story Ads transitioned to programmatic (75% of ad revenue now programmatic), Snap Pixel entered general availability, and the self-serve platform saw some updates in the quarter".

Snapchat later made some changes, but in the months following, over 1.2 million users around the globe signed a petition, asking the company to revert back told the old design.

The company held its first annual shareholder meeting last week via a webcast that lasted three minutes, an unusual affair because its publicly traded shares do not carry voting power.

Latest News