Snap sinks to a 2-month low as fewer people use Snapchat every day
- Snap reported its first-ever decline in daily active users on Tuesday.
- Shares initially popped 10% after the company said it lost less money than Wall Street expected, but sank when markets opened Wednesday.
- Follow Snap's stock price in real-time here.
Shares of Snap sank more than 6% Wednesday, falling to their lowest price since June, after the company reported active user numbers that disappointed investors.
For the second quarter, Snap said its total losses per share were smaller than Wall Street had feared and that revenue was more than analysts had expected. However, the company also saw its first-ever decline in daily active users.
Shares initially popped as much as 11% following the earnings report - which coincided with news that Saudi Arabia's Prince Alwaleed had invested $250 million for a 2.3% stake in the company - before sinking into the red early Wednesday as traders digested what the falling active users metric might mean for Snapchat's future.
Also weighing on the slumping share price Wednesday was the leak of some of Snapchat's source code on GitHub, a code-hosting side recently acquired by Microsoft. The forum quickly complied with a DMCA takedown request, but not before the snippet could be downloaded and shared widely.
"While our monthly active users continue to grow this quarter, we saw 2% decline in our daily active users," CEO Evan Spiegel said on a conference call with analysts.
He added: "This was primarily driven by a slightly lower frequency of use among our user base due to the disruption caused by our redesign. It has been approximately six months since we broadly rolled out the redesign of our application and we have been working hard to iterate and improve Snapchat based on the feedback from our community. We feel that we have now addressed the biggest frustrations we've heard and are eager to make more progress on the tremendous opportunity we now have to show more of the right content to the right people."
Snap is now trading more than 50% off its first trading price when it went public in March 2017, and Wall Street thinks it will only sink more. Analysts polled by Bloomberg give the stock an average price target of $11.76.
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