Snap Inc., Snapchat parent company, reports Q2 2018 earnings

Daniel Fowler
August 9, 2018

Prince Alwaleed bin Talal has just bought a 2.3% stake in Snap, Snapchat's parent company, to the tune of $250m (£190m).

The Los Angeles-based company's daily active users grew 8% year-over-year to 188 million, shy of the 193 million forecast by analysts. And while those on the Street were expecting the company to report a loss of 17 cents a share, Snap reported a loss of 14 cents a share, again bettering Wall Street estimates.

However, there was positive news elsewhere in the results as parent company Snap Inc reported revenue of 262.2 million dollars (£202.6m), up 44% on this time a year ago and above analyst expectations.

Co-Founder and CEO of Snap Inc.

Kelley has a $13 price target and a neutral rating for shares of Snap.

The company also tried to deflect from its growth problems by announcing that it had 100 million monthly active users in North America at the end of the quarter.

However, its daily active user base declined by 2% in the same period.

First round of United States tariffs on Chinese goods to hit $50B - USTR
All in all, China's trade surplus with the U.S. shrank to $28.08 billion in July against $28.97 billion in the previous month. China has already retaliated with duties of its own, and has pledged to match the USA dollar for dollar with new tariffs.

Analysts on average expected Snap to gain almost 2 million users in the second quarter from the first.

The company beat analyst revenue forecasts as it drew in more global and small business advertisers and posted a narrower-than-expected quarterly loss.

"We believe the market has trained itself to approach each quarterly result with a heavy dose of caution as Snap remains a "show me" stock", Moness Crespi Hardt analyst Brian White wrote in a recent note.

Snap said ending leases in Venice, California, to consolidate offices a few miles north in Santa Monica cost it $3.9 million in the second quarter and would result in total expenses of $25 million to $45 million in 2018, mostly in the current quarter.

"It's always going to be a niche platform, so the modest change isn't very remarkable", said Pivotal Research's Brian Wieser.

However it beat analyst expectations on revenue to rake in $262m over the last three months, indicating that while users may not be too keen on its Snapchat product since its design overhaul, advertisers are thinking differently.

These drops came as the company embarked on a huge redesigned and also committed to building hardware in the form of camera-toting spectacles.

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