Snap share price collapses 20% as revenue disappoints three ways

Snap Inc (NYSE:SNAP) shares collapsed in afterhours dealing, losing close to 20%, after the social media app disappointed thrice on revenue.

Revenue in Snap’s second quarter was reported at $1.24 billion which was slightly short of Wall Street estimates of $1.25 billion.

Average revenue per user was reported at $2.86, below the $2.91 pencilled in by analysts.

Then, new guidance for the third quarter sees revenue between $1.335 billion and $1.375 billion, versus a prior ‘mid-point’ analyst consensus of $1.36 billion.

It comes, according to market commentators, as Snapchat continues to find tough competition for advertising dollars in a marketplace dominated by TikTok and Meta’s Instagram.

Other metrics were decent

Nevertheless, Snap’s other second-quarter metrics appeared at least superficially decent.

Snap told investors that its daily active users number was up in the quarter, reaching 432 million – and its somewhat less engaged ‘monthly active users’ number was 850 million.

Chief executive Evan Spiegel, meanwhile, highlighted that the social messaging app’s premium Snapchat+ subscribers (who each pay a monthly fee of $3.99 for extra features) had now reached 11 million.

Snap's net loss for the quarter narrowed year-over-year to $249 million from $377 million this time in 2023, and, it had negative free cash flow of $73 million compared to $119 million a year ago.

Earnings (adjusted EBITDA) was positive for this year’s second quarter at $55 million, versus a $38 million loss in 2023.

On a per share basis, it equated to 2 cents per share which was in-line with market expectations.

Evan Spiegel added: “We continued to scale our advertising platform with active advertisers more than doubling year-over-year.

“We are looking forward to hosting our upcoming Snap Partner Summit on September 17th, where we will announce new updates to our service.”

In afterhours dealing, Snap shares were down $2.21 or 17.25% priced at $10.60 – extending a 3.83% loss from Thursday’s regular trading session.