Snap stumbles through another disappointing quarter
December 13, 2017 | 74° | Check Traffic

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Snap stumbles through another disappointing quarter

  • COURTESY PHOTO

    The technology world is scrutinizing Snap as an indicator of whether smaller social media companies can compete with behemoths like Facebook.

SAN FRANCISCO >> Ever since Snap, the maker of the messaging app Snapchat, went public in March, the company has become a closely watched barometer for Silicon Valley and Wall Street.

The technology world is scrutinizing Snap as an indicator of whether smaller social media companies can compete with behemoths like Facebook. And Wall Street is using Snap to gauge whether investors will embrace other unprofitable tech companies if they go public.

Snap has not delivered on either front. Over the past few months, the company has faced a litany of issues. Facebook’s photo-sharing app Instagram, as well as other Facebook apps that have copied Snapchat’s main features, have been growing more rapidly than Snapchat. In May, Snap reported disappointing earnings, its first as a public company. Its stock has since plunged well below its $17 public offering price.

Snap will soon face a make-or-break year, said Norm Johnston, chief strategy officer at Mindshare, a global media agency. “Either it will realize its full potential by delivering growth in daily users, or it will end up as the next Twitter,” the social media service that has been grappling with stalled growth, he said.

Today, Snap did little to change its trajectory when it reported quarterly earnings that missed Wall Street projections. The company reported a loss of 36 cents a share, versus estimates of a 33-cent loss. Revenue rose to $181.7 million, versus expectations for $185.8 million. The company recorded a wider quarterly loss than a year ago of $443.1 million, up from $115.9 million.

User growth was a mixed bag. The user base grew by 21 percent over the past year to 173 million, which was slower than analysts had expected. But the bulk of that growth came from North America, showing that the company can still expand in highly lucrative advertising markets like the United States. The average amount of revenue made per user increased by 109 percent over the year to $1.05.

Snap shares fell by more than 16 percent in after-hours trading after the company released its numbers.

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