Snap User Growth Slows, Shares Drop 7 Percent
Snap Inc.’s (NYSE: SNAP) shares fell more than 7 percent after the company’s last earnings report showed that its user growth has been slowing considerably. Snapchat has gone from 191 million daily active users in the first quarter to 188 million last quarter. This means the app lost 3 million daily users during the second quarter alone.
The app’s drop in daily active users started late last year over its controversial redesign. The redesign was a particular problem for Android users, with many of them voicing their complaints on other social media channels. In February, celebrity Kylie Jenner tweeted her dislike of the redesign and the company’s market value fell by roughly $1 billion. Snap decided to redesign the redesign in May.
Despite the drop in users, Snap posted better-than-expected sales last quarter. The Snapchat app is still wildly popular with teenagers. However, this was not as comforting to investors as it would have been without the slowing user growth. Some analysts are expecting Snapchat to post another decline in users when it releases its third quarter earnings.
Instagram has really been tough competition for Snapchat. Instagram launched its own “Stories” feature in 2016, leveraging many of the features Snapchat created first. Instagram now has about 400 million daily “Stories” users, double Snapchat’s entire user base.
The turnover in the company’s executive suite has also been concerning. Last month, the company’s chief strategy officer, Imran Khan, announced plans to leave after three years. Khan joined Snapchat in January 2015 after working as an analyst with Credit Suisse and JPMorgan Chase.
A number of executives have left the company over the past year, including the chief financial officer, its vice president of product, and its top engineer. Vice President of Product Tom Conrad announced his departure in January. In May, Chief Financial Officer Drew Vollero left and was replaced by former Amazon executive Tim Stone. Stuart Bowers, the engineer, also left in May and is now employed by Tesla.
This latest drop was the first time shares of the Snapchat parent company fell below the $8 threshold since it started trading in early 2017. Its shares have fallen more than 45 percent this year.