Snap Inc. (NYSE: SNAP) reported its third quarter earnings for fiscal year 2017. Snap missed analysts’ estimates in both revenue and earnings, sending shares plummeting by 11 percent during pre-market hours on Wednesday.
For the third quarter, Snap reported a revenue of $207.93 million, increasing 62 percent year over year, but under analysts’ estimates of $236.9 million. The company reported an EPS of $-0.14, slightly higher than last year’s same quarter of $-0.13, and also falling short of analysts’ estimates of $-0.13.
Daily active users for the third quarter was 178 million, increasing 17 percent year over year, but falling short of analysts’ estimates of 181.8 million. Average revenue per user was $1.17, increasing 39 percent year over year, also falling short of analysts’ estimates of $1.30.
Daily users only grew a small amount of 4.5 million or 3 percent quarter over quarter, which is lower than what both analysts and the company had expected.
Snap reported a net loss of $443.15 million, now totaling the overall net loss to $3.1 billion.
Snap also reported a $39.9 million loss in Spectacles alone after the company had overestimated its outlook. The company had expected Spectacle sales to grow, as the company planned to integrate them in other ways, but it was overlooked, and sales for Spectacles fell, leaving the company with hundreds of thousands of them.
According to CNBC, Snap is losing market share to its competitor, Instagram. Since Instagram launched its own Story feature, almost identical to Snap’s, it began to grow at a slower rate.
However, Snap seems to be grabbing attention by expanding the technology on its platform. Snap has added pinpoint location, augmented reality, and even its different type of advertisements compared to Instagram.
Shortly after Snap’s financial reports, Tencent, owner of China’s dominant messaging app WeChat, took another stake in Snap.
According to SEC filing, Tencent purchased another 145.8 million shares of nonvoting Class A common stock via open market purchases. This is roughly 12 percent of the company.
In the same filing, Tencent and Snap both said they are not obligated to disclose any changes in Tencent’s ownership and they will not guarantee reassurance in whether changes like these will be notified.