Snap Shares Plummet After Tech Company Misses Expectations

Snap Inc.
The Snap Inc. logo on a screen above a trading post on the floor of the New York Stock Exchange on Monday. (AP Photo/Richard Drew)

LOS ANGELES (Los Angeles Times/TNS) - Snapchat picked up fewer users and less revenue in the second quarter than analysts had expected, sending shares of owner Snap Inc. tumbling Thursday afternoon.

Snap delivered its second-quarter financial results Thursday following the close of the New York Stock Exchange. The Los Angeles tech company reported $182 million in sales, up 153 percent from $71.8 million in last year’s second quarter. Snap’s loss widened to $443 million, compared to $115.9 million in the same period last year.

Daily users of Snapchat increased to 173 million, but analysts had expected a couple of million more. Snapchat had 148 million users this time last year.

Snap, which went public in March, has seen its shares fall more than 40 percent since issuing its first earnings report.

Investors have expressed skepticism about whether Snap’s recent features launches, including a map showing locations of users and popular places, and its efforts to woo advertisers are doing enough to grow the company’s ad sales business. Some potential stock buyers have expressed concern that Snap is losing users and advertisers to Instagram, that has acknowledged copying features from Snapchat.

In the last month, 10 financial analysts have lowered their long-term target for Snap’s share price, while just one analyst has increased it, according to FactSet data.

Snap appeared to validate those concerns Thursday, showing choppy growth.

Financial analysts following the company had estimated Snap would see a modest increase in sales and similar usage growth when compared with the first quarter. Snap doesn’t provide guidance about its expected performance.

Shares fell nearly 8 percent to below $13 at one point in after-hours trading after closing at $13.77, up 21 cents on the day. They debuted on the stock market at $17.

Also weighing on Snap shares is the end of a six-month period in which employee-shareholders couldn’t sell their stock. Though big sell-offs aren’t expected, the threat of at least some increase in share supply has held prices down.