SNAP Reports poor second quarter results

Snap Inc. (NYSE: SNAP) reported its worse than expected second quarter results for the fiscal year that send shares plummeting down over 13 percent.

Snap posted an EPS loss of 16 cents compared to a loss of 14 cent expected by a Thomson Reuters consensus estimate. Revenue was $181.7 million compared $186.2 million expected by a Thomson Reuters consensus estimate.

Snap reported daily active users of 173 million compared to 175.2 million expected by a StreetAccount estimate. And average revenue per user was $1.05 compared  to $1.07 expected by FactSet.

Daily active users did grow from 143 million from last year’s second quarter, which is now up 21 percent year over year. Average revenue per user also grew from $0.50, which is up now 109 percent year over year.

Snap also reported an additional 7 million daily active users from quarter to quarter, but analysts were predicting at least a growth of 10 million daily active users.

It was reported that a significant majority of Snap’s second quarter revenue came from North America.

Snap executives have argued that they can meaningfully grow the business by making more money off existing users, rather than by relying on fast-paced user growth, according to Business Insider.

Evan Spiegel, CEO of Snap, said in the earnings call that average daily user of Snapchat creates more than 20 messages, or "snaps," per day. Spiegel also highlighted the dancing hot dog that became a viral social media sensation and it recorded over 1.5 billion used on the app. He also highlighted the Snap memory storage system, which Spigel states that it could become more important to the app.

Snap has begun slowly launching ads onto its app, but it’s projected for ad growth to move up quickly. Chief Strategy Officer Imran Khan said that 60% of Snap ads are now delivered programmatically.

Snap shares plummeted from $13.67 at close on Thursday and opened up at $11.99 on Friday. Shares have fallen over 13 percent since the company released its earnings.

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