Snapchat Stock Price Slump on Lower User Growth

Snapchat “Snap Inc” stock price plunged sharply after it reported lower than expected user growth for the second quarter.

The sentiments were also hit by trader’s concerns over the bleak outlook for the rest of the year due to slowing ad revenue.

Its second-quarter revenue of $445 million increased 17% from the past year period, slightly topping the analysts’ expectations for $444 million.

Daily active Snapchat users grew 17% to 238 million, however, this was down from analyst expectations which were estimated at a 20% or more increase.

Snap Inc. stock
Snap Inc. users up, but not with analyst expectations (operating at a net $ loss)

The company says that daily active users grew year over and sequentially in North America, Asia, and Europe.  

On the positive side, Snapchatters’ engagement increased during the second quarter and the number of chatter watching shows jumped 40% from the past year period.

The company reported a second-quarter net loss of $326 million, up from a loss of $255 million in the year-ago period.

Snap Inc. EBITDA also plunged to negative $96 million from negative $79 million.

Snapchat has generated sharp improvement is operating cash flow. Its second-quarter cash flows improved by $29 million to negative $67 million while free cash flow grew $21M to negative $82M.

“Thus far in Q3 we estimate year-over-year revenue growth to be 32% through July 19,” says Chief Financial Officer Derek Andersen.

And while they’re cautiously optimistic those trends will sustain, conditions could still deteriorate.

“For example, advertising demand in Q3 has historically been bolstered by factors that appear unlikely to materialize in the same way they have in prior years, including the back to school season, film release schedules, and the operations of various sports leagues.”

SNAP Snap Inc. daily Stock Chart

Snap Inc stock price soared more than 57% year to date and the shares are up 80% in the past twelve months.

Its stock is currently trading around $23, down slightly from 52-weeks high of $26 a share.



Leave a Reply

Your email address will not be published. Required fields are marked *