Snap added fewer users and made less money than Wall Street expected

Roger McNamee

Meanwhile, the average number of people using the vanishing message service daily rose 21 percent to 173 million when compared to the same period a year earlier. Snap quickly jumped from $17 to $24, but lagging user growth and lackluster revenue have scared off investors - driving its shares down 50 percent in the process.

The announcement sent shares of Snap 16% lower during after-hours trading in NY. In May, Snap reported disappointing earnings, its first as a public company.

Snap Inc banner on New York Stock Exchange in March. These notifications - which primarily appear in the Facebook app but can also be pushed to the phone's home screen - can conceivably keep people returning day after day. Cleveland Research lowered shares of Snap from a "buy" rating to a "neutral" rating in a report on Tuesday, July 25th.

Johnston added that 2018 is the "make or break year for Snapchat". While Spiegel and other Snap executives spoke repeatedly about the progress the company was having in luring in big advertisers with features such as self-service ads, the absence of guidance that could buttress that optimism with Snap's estimates added to the uncertainty of its future.

Snap's stock, already down 44 percent since its initial public offering in May, declined 14 percent, to $11.90, in extended trading after the results came out.

Shareholders are always scouring the tech industry for the next Facebook, and Snap is the latest contender for the crown - or at least that was the case when it floated on Wall Street.

Snapchat also wanted analysts to pay attention to the growth in North America, where the users are more valuable.

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Snapchat users under age 25 spend more than 40 minutes per day on the app, while those over 25 spend more than 20 minutes a day on the app.

"We'd have to add more than 10 million daily active users in the rest of world for every 1 million daily active users in the USA and Canada in order to make the same amount of money", Spiegel said. Snap reported a loss of 16 cents a share, excluding some items, compared to average analyst expectations of 15 cents a share, according to Yahoo Finance.

The Snapchat parent said its second quarter loss nearly quadrupled as revenue growth slowed and it added fewer new users, hurt by competition from social media giant Facebook (FB). Instagram Stories now has 250m active daily users while Snapchat has stalled at 166m.

"Given the amount of speculation around the lock-up expiration, I feel it is important to note that Bobby and I will not sell any of our shares this year", Spiegel said on a call with analysts.

As Snap becomes cheaper, the company could be attractive to acquirers, said Shebly Seyrafi, an analyst at FBN Securities.

By being opaque and simply promising "fun" things are coming and that "a lot of progress is being made", Spiegel isn't giving his users any reason to care about the continued existence of Snapchat right now.

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