Snapchat’s Controversial Redesign Blamed for Loss Millions of Active Users

08 August, 2018, 16:27 | Author: Brooke Harris
  • Snapchat Parent Snap Posts Its First Loss in Daily Active Users

But it posted otherwise unusually strong numbers - as well as a $250 million investment from a Saudi prince - that sent its stock soaring as much as 13%, before it came crashing down and bouncing all over the place again following renewed concerns around daily user numbers going forward.

Saudi Arabia's Prince Alwaleed bin Talal announced soon after the results that he had finalized a $250 million deal in May to buy a 2.3 percent stake.

"It gives an incredible opportunity for advertisers to come and win on our platform", Chief Strategy Officer Imran Khan told analysts on a webcast on Tuesday. Snap declined to estimate user growth for next quarter, but noted that third-quarter earnings have historically "trended down" for the company.

Snap also has been redesigning its app to encourage users to interact with more of its ad-supported videos.

However, there was positive news elsewhere in the results as parent company Snap Inc reported revenue of 262.2 million dollars (£202.6m), up 44% on this time previous year and above analyst expectations. Also, overall revenue is now $262 million this quarter. Analysts had expected Snap's user count to stay roughly the same in the second quarter after it rose by about 2% in the first quarter.

The company said users logging in at least once a day dropped for the first time, hitting 188 million over the three months ending June 30, down from 191 million earlier this year.

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The company cautioned that usage tends to slow in the third quarter, but did not make a specific forecast.

Earnings from Facebook and Twitter in recent weeks spooked social media investors by showing issues around data privacy, abusive content and phoney accounts were weighing on user growth and sending expenses higher.

But some analysts on Tuesday brushed off Snap's user drop, saying that Snapchat always had more limited appeal than larger rivals. It will be interesting to see if this trend of desiring privacy in the modern era will continue, or if Facebook and Twitter are just waiting to pounce.

Snap has been working to convince big advertisers to spend more of their budgets on Snapchat ads and reach the app's base of mainly 18-34-year-old users, and it beat analyst revenue forecasts as it drew in more worldwide and small business advertisers.

Employees had griped about Snap's network of small, spread out offices in Venice.

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