Snap Posts Slowest Quarterly User Growth In Its History; Shares Plunge 15%

Snap Posts Slowest Quarterly User Growth In Its History; Shares Plunge 15%

Snap Inc., already in the harsh Wall Street spotlight due to mounting complaints about its redesign last fall, released first-quarter results that included the lowest sequential growth in daily active users in the company’s history.

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The global user base grew 15% from the year-ago period to reach 191 million, but on a sequential basis, the 191 million was up just 4 million from levels in the fourth quarter of 2017. In North America, the user increase was even slimmer, up 1 million to 81 million.

Advertising gains helped total revenue leap 54% to $230.7 million, and the company posted an adjusted loss of 17 cents per share. While it was narrower than the year-ago mark, it undershot the 16-cent loss expected by Wall Street analysts. Revenue also fell well short of the consensus.

Two of Snapchat’s closest rivals, Instagram Stories and WhatsApp Status, have daily user bases of 300 million and 450 million, respectively. The fourth quarter of last year was when Snap unveiled its redesign, which has drawn criticism from celebrity users such as Kylie Jenner and Chrissy Teigen. Complaints have centered on the new interface making it more difficult for users to find their actual friends instead of accounts recommended for them.

Last week, the social network said it was testing a modification of the new design meant to address the backlash.

The news hit Snap’s beleaguered shares with full force. They closed the trading session at $144.13, down 1%, before plummeting 17% after hours to within range of their 52-week low of $11.28.

Execs plan to discuss the quarterly numbers in more detail during a conference call this afternoon with Wall Street analysts.

The restiveness about Snap Inc.’s performance and the redesign of Snapchat is at odds with the rapture during the NewFronts taking place all over New York City this week. Many companies, especially established players such as Viacom and Conde Nast, have been trumpeting their development of Snapchat content.