SAN FRANCISCO (REUTERS, AFP) - Shares of Snapchat parent Snap plunged Tuesday after reporting a widening loss and user numbers which fell short of market expectations.
Snap said it is redesigning the app, sending shares down about 20 per cent on concerns it was being beaten by established rivals such as Facebook's Instagram.
Snap's user growth in the last three months was about half what investment analysts expected. Daily active users rose to 178 million in the third quarter from 173 million in the second quarter. Analysts had expected 181.8 million, according to research firm FactSet.
Chief executive Evan Spiegel said the company, known for messages that disappear within seconds or hours, was launching a redesign after hearing for years that Snapchat was difficult to understand or hard to use.
"We are going to make it easier to discover the vast quantity of content on our platform that goes undiscovered or unseen every day," Spiegel said in written remarks prepared for a call with investment analysts.
He said that there was a "strong likelihood" the redesign would be disruptive in the short term, but that Snap was willing to take the risk for long-term gain.
In its third earnings report since the company went public in March with a US$3.4 billion valuation, Snap posted a net loss of US$443.2 million, or 36 cents per share, compared with a loss of US$124.2 million, or 15 cents per share, a year earlier.
Wall Street had expected a loss of 32 cents per share, on average, according to Thomson Reuters I/B/E/S.
Snapchat, popular among millennials for the bunny faces and floral tiaras that people can add to pictures, allows users to chat through a series of disappearing photos and videos. Users can also post images and videos as "stories" - ephemeral posts that can be viewed in chronological order and that disappear after 24 hours.
Investors' view of Snap has soured, though, since its IPO in March, when the Venice, California-based company had the hottest debut of any tech firm in years.
Before the quarterly release, Snap's share price was already down 39 per cent from its close on March 2, its first day of trading on the New York Stock Exchange. Facebook's shares were up 32 per cent over that time.
Facebook's Instagram said in September that it had 500 million daily active users.
As of June, Instagram Stories - a replica of Snapchat's synonymous feature - had 250 million daily users, up from 200 million in April, according to the company.
Snap's average revenue per user rose to US$1.17 in the latest quarter, from 84 cents a year earlier, but missed analysts'average estimate of US$1.30.
Revenue, a bulk of which comes from advertisements, rose to US$207.9 million from US$128.2 million. Analysts on average were expecting revenue of US$236.9 million.