Snapchat company's stock plummets by a fifth
The stock market punished the makers of the photo app Snapchat harshly for their first decline in revenue. The stock lost nearly a fifth of its value in one fell swoop.
Sales of the operating company Snap fell by seven percent to 988.6 million dollars in the past quarter. Snap had already put the decline on the horizon three months ago. Previously, the service was known for explosive growth.
The number of daily active Snapchat users rose from 375 million to 383 million within three months. Meanwhile, its quarterly loss improved to $328.7 million from $359.6 million a year earlier, Snap reported after the U.S. stock market closed Thursday. The stock lost 20 percent at times after the figures were presented and exited after-hours trading down 18.29 percent.
Online advertising weakens
Snapchat originally became big with photos that disappear after a short time. In the meantime, however, the company is focusing on combining digital effects with the real world on a large scale. The digital fitting room business has become more important for Snap because online advertising, the previous mainstay, is weakening.
The company recently introduced a digital mirror, which it also wants to bring to brick-and-mortar stores. Currently, the company is also experimenting with a chatbot based on artificial intelligence in the app.
Snap is being hit by the general cooling of the online advertising market, which is also being felt by top dogs Google and Facebook.
But there are other problems as well. After Apple's measures for more privacy on the iPhone upset many previous advertising models, Snap set up new procedures, but they are not yet running smoothly. On the iPhone, app providers like Snap must explicitly ask users for permission if they want to track their behavior across different apps and services for advertising purposes. Many refuse to do so.
On the conference call after the numbers were presented, one analyst asked management directly whether it wouldn't be better to scale back investments in augmented reality, such as digital try-ons, until Snap had more money again. Investor confidence in Snap is at stake, he warned. Co-founder and chief executive Evan Spiegel then expressed confidence that the advertising business would pick up again. (SDA)
