Published: Thu, August 09, 2018
Markets | By Otis Pena

Snap Reports First Drop in Snapchat Daily Users, Saudi Prince Takes Stake

Snap Reports First Drop in Snapchat Daily Users, Saudi Prince Takes Stake

Its share price surged by more than 11% in after-hours trading, partly on news of a $250m (£193m) investment from Saudi prince Alwaleed bin Talal, but ultimately closed down 2% at $12.90.

On the upside, the company reported second quarter revenues of $262.3m against analyst estimates of $249.8m, up 44% over the same period past year, and a loss of $0.14 earnings per share against a loss estimate of $0.18.

Despite his relatively large stake, Prince Alwaleed won't get any say in how Snap is run. Snap shares jumped as much as 14 percent following the announcements.

The company also tried to deflect from its growth problems by announcing that it had 100 million monthly active users in North America at the end of the quarter. That 188 million daily active user number is 8 percent higher than this time past year, and CFO Tim Stone said that monthly active users are now up to 100 million in United States and Canada.

Despite the fall in the number of users, the firm said revenues were up and its losses had declined in its second quarter. "It has been approximately six months since we broadly rolled out the redesign of our application, and we have been working hard to iterate and improve Snapchat based on the feedback from the community", he said. This is over 20pc lower than the previous quarter, when Snap lost $443,093. That's a drop of 2 percent, or 3 million users, since the last quarter, and marks the first time that user count has dropped in the company's corporate history.

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Snap said Tuesday that third-quarter revenue would be $265 million to $290 million. After initially shooting up more than 10 percent following the unexpected revenue beat, it then dipped to below its closing price before ticking back up slightly.

The company beat analyst revenue forecasts as it drew in more worldwide and small business advertisers and posted a narrower-than-expected quarterly loss.

"It's always going to be a niche platform, so the modest change isn't very remarkable", said Pivotal Research's Brian Wieser.

Snapchat's controversial redesign has sent users running for the exits.

These drops came as the company embarked on a huge redesigned and also committed to building hardware in the form of camera-toting spectacles.

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