Wednesday 16 January 2019 2:35 pm

Snap shares plummet as its finance chief’s departure takes a toll on investor nerves

Shares in Snap have opened this afternoon down almost 12 per cent, after news broke of its chief financial officer's impending departure late last night.

The company's shares dipped more than eight per cent in after-hours trading, before falling even further as markets opened today to an 11.8 per cent drop.

Snap said in a filing last night that Tim Stone will be leaving his role at Snap after less than 12 months in the role, citing a wish to "pursue other opportunities".


Stone, who joined Snap from Amazon in May, is only the latest executive to leave the parent company of photo-sharing app Snapchat. The firm has been plagued by a string of high-profile exits since it went public nearly two years ago, including the heads of its strategy, content, sales and human resources divisions among others.

Read more: Snap loses its second finance chief in less than a year

The departure comes as the loss-making Snap is attempting to recover its financial woes, despite user numbers continuing to fall. The tech firm said it expects to post a loss of between $75m and $100m for the fourth quarter, the results of which are due on 5 February.

Snap said yesterday that it is now expecting revenue for the fourth quarter to be "slightly favourable to the top end" of its previous guidance, which predicted revenues between $335m and $380m.

"To lose one CFO looks like misfortune, to lose two in a year looks like carelessness," said Laith Khalaf, senior analyst at Hargreaves Lansdown.

"Snap hasn’t yet turned a profit and its shares are wallowing well below its flotation price, so another senior resignation isn’t a great augur for 2019."

"Network effects can be a powerful ally of social media platforms, if everyone’s on one, you need to be on it too. But it cuts both ways, and a dwindling user base can lead to a vicious downward circle."


Snap's share price has fallen around 50 per cent in the last year, and hit a record low of $4.99 per share last month – more than 70 per cent below its initial listing price in March 2017.

Shorts on Snap stock have risen to more than $903m as of today's market open, almost 24 per cent of its total float according to data from S3 Partners.

 

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