Snap shares were down nearly six per cent today following the release of its second quarter results last night that saw an uptick in revenue but a decline in quarterly users.
Shares in Snap opened at $12.83 and are currently trading at $12.32 on Nasdaq.
The drop is most likely down to Snap’s revelation yesterday evening that it lost 3m daily active users in the second quarter, as customers still show their hostility to a number of redesigns of the Snapchat app.
Read more: Snap loses 3m daily active users but defies analyst expectations on revenu
Snap defied analyst expectations to report Q2 revenue of $262m (£203m), up from $182m in the same quarter the previous year. Analysts predicted revenue would increase to $251.2m.
Shares in after-hours trading were volatile as the market grappled with better-than-expected revenue but a drop in daily users from 191m in the first quarter to 188m in the second. The volatility has continued into today.
Chief executive of Mindshare’s Worldwide Central, Nilufar Fowler, said: ”The drop in Snap’s share price will almost certainly be linked to the decline in DAUs – a loss of 3m daily users since Q1. The loss is relatively small, and it’s certainly too early to say that it signals a trend, we’ll have to wait and see whether the decline is repeated in the next quarter’s results.
“It’s unlikely that any single factor could be blamed for the decline in DAUs – more likely is a combination of factors, including the impact of GDPR in Europe, a potential decline in overall social media usage, the negativity around the infamous redesign, and the plateauing growth of overall social media users.
“It’s likely that some of those lost DAUs will be spending more time on Facebook-owned Instagram, which has introduced Instagram Stories and IGTV to compete directly with Snap Stories.”
Snap was also buoyed by a tweet from Saudi Arabia’s Prince Alwaleed bin Talal confirming he had invested $250m into the company in exchange for a 2.3 per cent stake.
The stake is valued at $10.8bn, despite Snap’s overall market capitalisation sitting at just $17bn.
Read more: Saudi Arabian prince snaps up a $250m stake in Snap