Snapchat, the social media company that threatened to snatch away some of Facebook’s customers, had its IPO in early March of 2017. SNAP shares were offered at a price of $17 per share at the IPO, and were quickly gobbled up by investors who were convinced that Snapchat was a great company to invest in. Since its IPO, Snapchat has faced some challenges, with the stock sinking below the $17 IPO price in June of this year. The company recently released its quarterly earnings report which revealed disappointing results.
Snapchat continues to face stiff competition from rival, Facebook, and recorded a lower-than-expected number of daily active users using the messenger app. This, along with disappointing earnings results for the previous quarter, resulted in a 6% drop in share price of Snapchat shares. Analysts had expected the number of active daily users of the Snapchat app to come out at around 175.2 million. The actual results fell just below expectation to end up at the 173 million mark. Even though the number of daily users was in fact an increase over the last quarter’s 143 million users, it was not as much growth as expected.
Snapchat’s average revenue per user is currently at $1.05, but this still falls below analysts’ expectations of $1.07 per user. Nevertheless, this figure represents a doubling of revenues compared to the previous quarter’s results. At the same time, the company posted a net loss of $443.1 million for the previous quarter.
Generally speaking, Snapchat is experiencing growth, but at a slower rate than expected. With increasing competition from other social media platforms such as Facebook and Instagram, Snapchat will have to grow at a faster pace to keep investor confidence high. In addition, the company will need to generate consistent profits to stay afloat.