Snap Earnings: Shares Soar, Then Dip, After Q2 Beat

Jamie McCarthy  Getty Images for Tribeca Film Festival

Snap caught a second-wind after posting its results last night, when Saudi Arabia's Prince Alwaleed bin Talal tweeted that he has invested $250m (£193.2m) into the company in exchange for a 2.3 per cent stake.

Daily active users fell to 188 million, down 2 percent from the prior quarter.

Its revenue was $262 million (around Rs. 1,800 crores) in the second quarter, beating the average estimate of $250.43 million (roughly Rs. 1,700 crores), as average revenue per user surged to $1.40 (roughly Rs. 96) from $1.05 (roughly Rs. 72) a year ago. Snap shares jumped as much as 14 percent following the announcements.

On Thursday, the businessman announced a $267 million deal to buy newly issued shares in the Dutch music streaming service Deezer through his Kingdom Holding investment company and Rotana Group, the entertainment company he also owns. The period that ended in June was the first full quarter in which all users shifted to a new version of Snapchat that separates content from a user's friends and content from public figures.




With self-service ads, Snap has been able to grow revenue in regions such as Australia and the Middle East, where direct sales efforts are more limited and advertisers have few other options to market to its mainly 18-34-year-old users. "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".

Snap shares have dropped 10 percent since the beginning of the year. Snap in first-quarter results said it would again adjust how it presents content. It will be interesting to see if this trend of desiring privacy in the modern era will continue, or if Facebook and Twitter are just waiting to pounce. Snap declined to estimate user growth for next quarter, but noted that third-quarter earnings have historically "trended down" for the company.

Snap executives told analysts that the redesign was the primary reason for usage slipping and that a European Union data protection law that spurred changes to user privacy terms had no material effect.

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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