Snap Inc. (NYSE: SNAP) shares plunged 14% on Friday after the parent Company of photo-sharing app Snapchat posted its second straight quarter of user losses, despite reporting a smaller net loss and better revenue than expected.
Snap shares fell more than 2% in after-hours trading on Thursday, after having gained 5.91% in regular hours. The stock fell more than 12% in early-trading Friday.
At least four Wall Street analysts cut their price target as Snap’s much-criticized app redesign continued to weigh heavy on daily active user members (DAU), particularly in the U.S. and Europe.
Since its launch in 2011, Snap’s user growth has stalled in the past two years as Facebook-owned Instagram has mimicked its best features. The Company reported 186 million daily active users for the three months ending in September, a decline of 1% versus the previous quarter and below analysts’ expectations of 187.5 million. In comparison, Instagram reported a DAUs of over 1 billion.
This is the second time Snapchat has lost daily active users as a public Company, since it went public in March 2017. Snap’s DAUs have now declined by 5 million since the first quarter.
On a call with analysts on Thursday, Chief Executive Officer Evan Spiegel said the daily user decline was primarily among Android users. “We have been developing a completely new version of our Android application to be lightweight, modular, and performant,” he said. “The Android community represents a global growth opportunity for us and we are making good progress testing the application in select markets.”
Snap reported an adjusted loss of 12 cents per share, ahead of estimates for a 14-cent loss. It posted revenue of USD 298 Million, beating views for USD 283 Million. For the fourth quarter, Snap expects revenue in the range of USD 355 Million to USD 380 Million. The midpoint of USD 367.5 Million is below expectations of USD 371 Million.
Snap shares have fallen more than 50% this year, while Facebook’s, hurt by the fallout of the Cambridge Analytica privacy scandal, have lost about 14%.