Its losses are rising much quicker than its revenue
BEAM 8 Nov, 2017
As Snap's Q1 and Q2 didn't meet expectations, Q3 was no better. Snap missed out on investors' expectations with regards to income as well as user growth, plus the stock price dropped over 15% in after-hours dealing.
Snap generated $207 million in income for Q3, up 62% as compared to the same time last year. However its deficits grew significantly : Snap lost $443 million in the Q3, almost four times the total funds utilised during the same time last year . Approximately $40 million of those funds was a markdown for unsold Snapchat Spectacles.
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Snap said it currently retains 178 million daily active users, an increase of 17% year on year, and it has added 4.5 million more daily active users as compared to Q2.
Snap has been finding ways to improve and automate its advertising business. However, the short-term effect on its revenue has not been easy.
Reports suggested that app installs and social mentions of Snapchat have decreased since the company IPO. Rivals Instagram Stories and WhatsApp Status have now exceeded Snapchat in userbase, with more than 300 million monthly users respectively. Snap states it prepares to reward its top users, causing a virtuous cycle which it hopes to use to increase users hopes will attract more users.
CEO, Evan Spiegel, mentioned that the company intends to drastically revamp Snapchat to increase user growth. However, he cautioned that it could backlash too.