Snapchat stocks have plunged today after the firm posted a poor Q1 financial report on Tuesday and a conference call failed to reassure investors.
At the time of writing, share prices are down -21.40% to $11.10 USD, marking a decline of nearly 25% since the start of 2018 and the lowest per-share price in years. Snapchat (NYSE:SNAP) posted a poor Q1 financial report on Tuesday, detailing:
- Loss per share of 17 cents a share.
- Group sales of $230.7 million, which was $13.8 million below analyst estimates.
- An active user increase of 15% to 191 million, below analyst estimates.
>> Snapchat Reports Q1 Financial Results
In addition, the firm held a management call on the same day to address investor concerns following the report’s publication. Unfortunately for Snapchat, investors didn’t like what they heard. Snapchat CFO Drew Vollero warned investors that the company’s growth rate for the second financial quarter would “decelerate substantially” from Q1 levels, also noting that the firm is planning for increased infrastructure costs as it plans further changes to the application.
Meanwhile, CEO Evan Spiegel called back to a disastrous redesign to Snapchat’s layout earlier this year, which was widely criticized by users. Spiegel claimed that the update “created some headwinds in our revenue this quarter by disrupting user behavior and creating some apprehension among our advertising partners.”
Snapchat’s popularity plunged in early 2018 after users and big-name celebrities including Kylie Jenner voiced criticism over a layout redesign. In addition, a change.org petition, claiming that the layout update made the app “more difficult” to use, contained “useless” new features and called for a rollback, garnered over 1.2 million signatures. It seems investors have not forgotten about this.
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Despite this, Spiegel attempted to reassure investors by claiming the redesign “created a lot of new opportunities” adding that “we look forward to continuing our efforts to refine and improve Snapchat.” But clearly, investors aren’t convinced. With Snapchat themselves admitting that the financial fallout from the previous redesign will extend far into 2018, shareholders seem to have backed out.
It remains to be seen what will happen with Snapchat stocks through 2018. On the bright side, social media firms have the capacity to make some pretty hasty comebacks, as we have seen with Facebook in recent weeks.
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