This article is more than 1 year old

Oh Snap! Rap for crap chat app brats in nine-month $3bn scrap flap

Spiegel's crew lost $2 on every buck they made. But we're definitely not in a bubble

Shares in (former) social media darling Snap Inc. are understandably tanking today after the photo-spaffing service said it was losing more money and gaining fewer users than anticipated.

The Q3 report, out today, found the upstart recording losses that were more than double its revenues while user growth also slowed and a disastrous hardware rollout only deepened the financial hole.

Here's a summary of the three months to September 30:

  • Revenues of $208m were up 62 per cent on the year-ago quarter, but well below analyst estimates of $238m.
  • An eye-watering net loss of $443m compares to a $124m loss in Q3 2016. For the year so far, Snap is down to the tune of $3.1bn, including $2.5bn in stock compensation charges.
  • Earnings per share were actually a loss per share of $0.36, worse than the $0.33 per share hit analysts had hoped for.
  • The number of daily active users grew by 4.5m, or three per cent, from the second quarter to 178m in this latest quarter. That's up from 153m in the year-ago period, or 17 per cent. Snap admits this is lower than it was hoping for.
  • The disastrous Spectacles hardware rollout lead to a write-off of $40m.

If that wasn't enough to give investors reason to panic, CEO Evan Spiegel said that even more cash will need to be set ablaze in the short term because the Snapchat App was proving "difficult understand or hard to use."

"As a result, we are currently redesigning our application to make it easier to use," Spiegel warned analysts.

"There is a strong likelihood that the redesign of our application will be disruptive to our business in the short term, and we don’t yet know how the behavior of our community will change when they begin to use our updated application."

Not surprisingly, Wall Street reacted to this news poorly. Snap Inc. shares nose-dived by 17 per cent to $12.55 apiece in after-hours trading.

Investors can't say they weren't warned. Before Snap even went public with its IPO, former employees were warning that the photo-sharing site's growth figures and financial projections were all smoke and mirrors, charges that were echoed by disgruntled investors when they filed suit against Snap earlier this year. ®

More about

More about

More about


Send us news

Other stories you might like