Snap shares plunge after slower than expected user growth and app redesign

 
Jasper Jolly
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Snap has struggled since listing earlier this year (Source: Getty)

Shares in US tech firm Snap plunged by more than 16 per cent in after-hours trading after it reported slower user growth and said it plans to revamp its app.

Daily active users of its disappearing messaging app, Snapchat, rose to 178m in the third quarter, up from 153m in the same period last year but lower than analysts had expected.

Snap said it will redesign its app to be easier to navigate for older users as well as introducing a feed sorted by an algorithm to improve engagement.

Read more: Snapchat was down for four hours last night

In remarks prepared for the earnings announcement, chief executive and founder Evan Spiegel said: “There is a strong likelihood that the redesign of our application will be disruptive to our business in the short term, and we don’t yet know how the behaviour of our community will change when they begin to use our updated application.

“We’re willing to take that risk for what we believe are substantial long-term benefits to our business.”

The firm recorded a net loss of $443m (£337m) during the quarter, compared to a loss of $124m a year earlier.

Imran Khan, Snap’s chief strategy officer, said the firm wants to grow revenues from advertising faster.

The firm took a $40m charge on unsold Spectacles, their hardware product which allows users to record messages through glasses. Speigel admitted Snap had misjudged early demand.

Read more: User numbers and ad revenue growth to take the spotlight in Snap's results

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