<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Snap Inc., maker of the Snapchat social media app, handily beat revenue estimates in its second-quarter earnings report on Tuesday. But its daily active user growth, which fell short of expectations, sent its stock tumbling in after-hours trading.” data-reactid=”20″>Snap Inc., maker of the Snapchat social media app, handily beat revenue estimates in its second-quarter earnings report on Tuesday. But its daily active user growth, which fell short of expectations, sent its stock tumbling in after-hours trading.
Snap reported a net loss of 23 cents a share on revenues of $454 million, for a 17 percent growth in revenues compared to the same period last year. Analysts expected a loss of 22 cents a share on revenue of $442 million.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="More from WWD” data-reactid=”22″>More from WWD
The company also reported 17 percent year-over-year growth in daily active users, though the 238 million DAUs slid in slightly shy of the 238.5 million expected. The news was enough to send shares down as much as 11 percent, before rebounding somewhat, settling into a 4 percent loss.
Naturally, the company would rather put attention on the stable growth of its daily active user base and its revenues, particularly as it achieved these numbers during the first complete quarter operating under the coronavirus pandemic.
“We continued to grow our community and business in a challenging and uncertain environment,” Snap chief executive officer Evan Spiegel said in a statement. “I am proud of our team for innovating on new experiences for our community and driving value for our partners, demonstrating the importance of our service in people’s lives. We are grateful that the resilience of our business has allowed us to remain focused on our future growth and opportunity.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="According to Snap, users engaged the app 30 times a day on average, and daily viewership of Snapchat shows grew more than 45 percent, compared to the year-ago quarter.” data-reactid=”28″>According to Snap, users engaged the app 30 times a day on average, and daily viewership of Snapchat shows grew more than 45 percent, compared to the year-ago quarter.
Where it goes from here, however, is a little hazier. Advertising in the next quarter — typically fueled by promotions for things like back-to-school season, sporting events and movie releases — appears “unlikely to materialize in the same way they have in prior years,” said chief financial officer Derek Andersen.
“At this point in time it is difficult to predict how these factors may impact advertising demand in the remainder of Q3,” he continued. “Our best estimate at this point is that our full-quarter revenue growth rate is likely to be below our quarter-to-date estimated actual growth rate, and as a result we have built our internal investment plan based on revenue growth of approximately 20 percent.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The scenario could shape results for social media sites across the board. So far this year, Snap shares gained some 29 percent, as it adds users and expands its platform with more features. But competition remains stiff, as rivals continue to vie for eyeballs, not to mention wallets.” data-reactid=”31″>The scenario could shape results for social media sites across the board. So far this year, Snap shares gained some 29 percent, as it adds users and expands its platform with more features. But competition remains stiff, as rivals continue to vie for eyeballs, not to mention wallets.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Facebook and Instagram, which recently unveiled their retail Shop initiatives, appear ready to do battle with teen-driven video platform TikTok. Instagram released a competitive video-editing app called Instagram Reels, and Facebook is rumored to be preparing its own version of TikTok soon.” data-reactid=”32″>Facebook and Instagram, which recently unveiled their retail Shop initiatives, appear ready to do battle with teen-driven video platform TikTok. Instagram released a competitive video-editing app called Instagram Reels, and Facebook is rumored to be preparing its own version of TikTok soon.
But both competitors are dealing with challenges that could change the dynamic. TikTok’s developer, Bytedance, has Chinese-based roots, which has apparently prompted the U.S. government to consider a block of the popular app.
In some ways, Snapchat and TikTok speak to similar audiences, so Snap could wind up benefiting if the U.S. makes good on its threat.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="As for Facebook, the social giant is still contending with an advertising boycott that could have unforeseen effects — particularly if brands start redirecting more of their budgets to Snapchat.” data-reactid=”35″>As for Facebook, the social giant is still contending with an advertising boycott that could have unforeseen effects — particularly if brands start redirecting more of their budgets to Snapchat.
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