Another record low for Snap after 14% drop post-earnings

Snap, the Snapchat parent, has had a very difficult ride in the
stock market since debuting in March. After pricing its IPO at
$17 and then reaching highs of $27, the company has fallen to
less than half that. After losing 14 percent of its value in a
single day’s trading, Snap closed Friday at $11.83.

The growing social media company revealed on Thursday that it
has 173 million daily active users, up more than 20 percent
since last year. But that wasn’t enough to impress Wall Street,
which was expecting more than 175 million users.

Analyst expectations are always built into the stock price and
missing them will cause shares to plummet. And Snap not only
missed on user growth, but revenue and losses, as well. 

The company brought in $181.7 million in revenue, a 153
percent increase from last year, but investors were expecting
more than $186 million. But losses also increased
substantially, $115.9 million for last year’s quarter versus
$443.1 million for this year.

The success of Instagram Stories is one of the main reasons
that investors are skeptical of Snap. Instagram copied its
short-form video feature last year and has seen tremendous
success. The Stories feature already has 250 million daily
users, over 75 million more than Snap.

Snap also recently found out that it won’t be in the S&P 500, which is a
significant blow because a lot of investors buy that index. And
it looks like the company’s Spectacle glasses aren’t selling well.

The bull case for Snap is that the team has been innovative.
The company popularized disappearing messages and came up with
the stories idea. Snap also has been clever with its use of
AI-enhanced face filters. But in order to survive as a public
company, the team will have to come up with something that
can’t be so easily replicated.

TechCrunch’s Josh Constine has a
few ideas. 

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