Snapchat was once a promising tech stock, but it has had major growing pains since going public. On Thursday, the popular social media company revealed it has 173 million daily active users in Q2, which is up more than 20% since last year. You would imagine that would be seen as fantastic news and cause the stocks to rise, but the numbers did not impress Wall Street. Investors were expecting at least 175 million daily users. Snapchat had a whopping $181.7 million in revenue, a staggering 153% increase from last year. You would imagine that would be seen as fantastic news and cause the stocks to rise, but the numbers did not impress Wall Street. Investors were expecting more than $186 million. Snapchat has had growth, but its net loss also bloated to $443.1 million, from $115.9 million a year ago. Snapchat is on pace to lose more than $1 billion in 2017.
Only five months after the social messaging service went public, Snapchat has seen a rollercoaster of ebbs and flows on their stock. Snap, Snapchat’s parent company, had an IPO of $17 in March, hit a high of $27, but on Friday Snap closed at $11.83. The company had lost 14% of its value in a single day’s trading.
In what must be a monumental slap in the face, Instagram Stories is surging, a feature Instagram copied from Snapchat. Instagram’s Stories feature only launched last August but has 250 million daily users, over 75 million more than Snapchat. With the Facebook-backed Instagram having features nearly identical as Snapchat, investors worry about the growth of Snapchat since it has stolen Snapchat’s momentum. Snapchat’s growth in daily users has slowed to only a few million each quarter, the same major issue for Twitter.
During Snap’s Q2 conference call on Thursday, CEO Evan Spiegel said the company had made improvements to its Android app, but there were certain issues that required more significant structural changes that could creep into 2018.
“We’ve seen great traction with many of our new products, from lenses and creative tools that inspire Snap creation to Search, Maps and Memories that provide new ways to view snaps,” Spiegel said. “Although many of these products are in their infancy, we should be able to improve them quickly as our community adopts them and lets us know how we can better serve their needs.”