Snap Inc (NYSE: SNAP) reported some troubling first-quarter numbers on Tuesday that have investors worried and SNAP stock plummeting 17 percent in the after-hours session. Snapchat’s app redesign received some harsh criticism from its user base in the first quarter, and that criticism appears to have translated to lackluster subscriber count and revenue growth.
Snap reported a first-quarter earnings per share loss of 17 cents, in line with consensus analyst estimates. However, revenue of $230.7 million was below consensus estimates of $244.5 million. Revenue was up 54 percent from a year ago.
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Perhaps most importantly, Snap reported 191 million global active daily users, up from 187 million last quarter. Wall Street had been expecting 194 million daily active users. In addition, average revenue per user was $1.21, down from $1.53 one quarter ago and short of consensus estimates of $1.27.
Snap reported a net loss of $385.7 million, down from $2.2 billion in the first quarter of 2017.
In a statement, the company said its second-quarter revenue growth will “decelerate substantially” compared to the first quarter.
“While we had an average of 191 million daily active users in Q1, our March average was lower, but still above our Q4 average,” CEO Evan Spiegel says. “We are already starting to see early signs of stabilization among our iOS users as people get used to the changes, but still have a lot of work to do to optimize the new design, especially for our Android users.”
GBH Insights head of technology research Daniel Ives says Snap’s first quarter user growth is a black cloud over the company.
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“SNAP delivered a massive miss across the board which will further ignite fears that this company has major challenges ahead with its app redesign and business model in limbo,” Ives says. “It all comes down to monetization in our opinion, and SNAP’s 1Q speaks to the Everest-like uphill climb the company has ahead of itself to turn this platform and growth trajectory around.”
GBH Insights has a “highly attractive” rating and $14 price target for SNAP stock.
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Snap Inc Stock Crashes After Revenue and User Misses originally appeared on usnews.com
