Share prices of Snapchat’s parent company dropped to more than 17% in after-hours trading on Thursday, to about $11.40 per share. Over the last quarter, the company reported huge losses on disappointing sales and user growth. This left stock prices more than 60% lower than its all-time high of $29.44 per share, which was attained the day after Snap’s initial public offering on March 2.
The company‘s current share price is 33% lower than its IPO price of $17 per share.
The California-based company lost more money than Wall Street analysts predicted over the last quarter. The anticipated loss was 14 cents a share while the actual loss was 16 cents a share. Snap also disappointed on the revenue front, missing the predictions by 2.4%.
CEO Evan Spiegel didn’t address nagging questions about the threat from Instagram, which has consistently been knocking off Snapchat’s key features, such as its colorful camera filters and its “stories” function that builds photo and video montages that last only 24 hours.
Spiegel and his team insisted that it was “early days” for promising new products like “Snap Map,” which allow users to see one other users’ locations, and that with time, this feature would gain popularity too.
Snap reported revenues for the last quarter at $181.7 million, which is up 153% from last year but slightly shy of the $186.2 million anticipated by Wall Street analysts.
The number of daily active users (DAU) drawn to Snap’s core product Snapchat, the disappearing message app, is what spooked investors. Snapchat’s DAUs came in at 173 million, an increase of 7.3 million over the first quarter’s 166 million. However, analysts had expected the DAU to grow by 10 million.
The slow momentum in growth disturbed Needham’s Laura Martin who commented on Snap’s “inability to prevent ‘fast followers’ like Facebook from stealing its best ideas.” Indeed, by snapping up Snap features for itself, Instagram has grown to 250 million DAUs, 45% more than Snapchat’s.
Pivotal’s Brian Wieser was one of the few analysts who considered Snap’s results “in line” with his forecast. But his target price of $9 per share suggests that the company still has work to do.