Snapchat stock pops despite drop of 3 million users

Kenny Grant
August 8, 2018

Critics in the past have anxious about Snap keeping user engagement up, keeping the users coming back and keeping them using the application, which is declining in some areas while growing in others, leading investors to boost the stock up in after hours trading although it has since levelled back to around the closing price.

Advertising revenue is up 48 percent year-over-year as well, making the platform all the more enticing to the potential advertiser.

Snapchat's ad revenue is on the rise, but the company saw its first decline in users, according to the quarterly report it disclosed on Tuesday.

"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.

Snapchat was forced to redesign the new look, but not before it started to experience a decline in users at the end of the first quarter, which continued into the latest quarter.

The company has struggled with a rocky redesign widely criticized by users. Despite the decline in active monthly users, Snapchat saw its revenues jump to $262.3 million, up by 44 percent from the same quarter a year ago. This is over 20pc lower than the previous quarter, when Snap lost $443,093.

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Snap reported 188 million daily active users during the last quarter - falling short of Wall Street's expected 192 million and dropping from last quarter's 191 million. "Our users continue to spend an average of over 30 minutes on Snapchat on a daily basis". CNN reports that this is the first time Snapchat's user count has dropped since Snap Inc went public.

The company cautioned that usage tends to slow in the third quarter, but did not make a specific forecast. It also warned that, like Facebook and Twitter, user growth had been punished by the implementation of Europe's General Data Protection Regulation.

But some analysts on Tuesday brushed off Snap's user drop, saying that Snapchat always had more limited appeal than larger rivals.

Snapchat has more than 100 million monthly active users, the company said, even though that was typically a metric it never cared about.

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

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