Snapchat owner Snap Inc. on Tuesday reported user growth that fell short of market expectations, sending its shares down nearly 20 percent in after-hours US trading.
Daily active users rose to 178 million in the third quarter from 173 million in the preceding three months, the company announced, against analyst forecasts for a figure of 181.8 million, Reuters reports.
Chief Executive Evan Spiegel said the firm, known for messages that disappear within seconds or hours, is launching a redesign after hearing for years that Snapchat was difficult to understand or hard to use.
“We are going to make it easier to discover the vast quantity of content on our platform that goes undiscovered or unseen every day,” Spiegel was quoted as saying in written remarks prepared for a call with investment analysts.
He said that there is a “strong likelihood” the redesign would be disruptive in the short term, but that Snap is willing to take the risk for long-term gain.
In its third earnings report since the company went public in March with a US$3.4 billion valuation, Snap posted a net loss of US$443.2 million, compared with a loss of US$124.2 million a year earlier.
Average revenue per user rose to US$1.17 in the latest quarter, from 84 cents a year earlier, but missed analysts’ average estimate of US$1.30.
Revenue, a bulk of which comes from advertisements, rose to US$207.9 million from US$128.2 million a year ago. Analysts on average were expecting revenue of US$236.9 million.
Investors’ view of Snap has soured since its IPO in March, when the California-based company had the hottest debut of any tech firm in years.
Before the quarterly release, Snap’s share price was already down 39 percent from its close on March 2, its first day of trading on the New York Stock Exchange, Reuters noted.
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