Snap Shares Plummet After Tech Company Misses Expectations

Snap's sold 42,000 Spectacles in Q2 2017

While that's a gain of 21 percent year-over-year, it represents growth of 4 percent (or 7 million new users) from the previous quarter, down from growth of almost 24 percent in the second quarter of 2014. It offers Snapchat, a camera application that helps people to communicate through short videos and images. (NYSE:SNAP) by 6.3% during the second quarter, according to its most recent disclosure with the Securities and Exchange Commission.

But it wasn't all bad news.

Like other social media companies that have gone public, some of the main focuses among analysts have been on SNAP's user growth, average revenue per user (ARPU) and the company's path to profitability. A measure of revenue that Snapchat generates from each user was flat compared with the figure in the fourth quarter of 2016. Instagram in its entirety, meanwhile, had more than 400 million daily users as of February, the last official count. The average user creates 20 snaps a day and Publisher Story views are up 30pc quarter-by-quarter. Since going public in March, shares have declined past the company's initial public offering (IPO) price of $17 and recently hit a new low of $11.91 on August 3. Investors have anxious that the app maker won't be able to grow its ad business in the face of mounting competition from Facebook.

Also weighing on Snap shares is the end of a six-month period in which employee-shareholders couldn't sell their stock.

CEO Evan Spiegel kicked off this quarter's earnings call with analysts. The service added another 2 million users in Europe and the rest of the world, respectively.

Snap executives, however, expressed confidence during an earnings call with analysts that fresh advertising tools and an increase in the amount of time people spend using Snapchat were among factors positioning the company to excel in the long term.

Facebook, which once tried to buy Snapchat but was rejected, has instead spent its time taking the yellow app's most popular features.

Additionally, Spiegel said the company is working to stabilize the backend infrastructure of Snapchat's Android app. Snapchat added an impressive-sounding 7.3 million daily active users in the past three months. The pair's post-IPO lockup will expire Monday.

"Near-term issues hang on the stock, but we believe patient investors should look through the noise at the long-term opportunity", Jefferies analyst Brian Fitzgerald wrote in a note to clients.

Chief Strategy Officer Imran Khan said that 60% of Snap ads are now delivered programmatically. Stifel Nicolaus' price target would indicate a potential upside of 30.72% from the company's current price. Raymond James Financial, Inc. initiated coverage on Snap in a research report on Tuesday, April 25th.

Several other research firms have also issued reports on SNAP.

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