Snap's redesign slowed down user growth

Shares were down 16% after hours.

Wall Street analysts are recasting their projections and slashing their stock price targets on Snap Inc (NYSE:SNAP) a day after the Snapchat app maker posted dismal first-quarter results.

The Snapchat redesign, announced in November but rolled out in January, separated users' friends from brands, celebrities and influencers while moving posts from people that users communicate with often to another part of the Snapchat app.

Snapchat has begun selling a new version of its eyewear with built-in cameras after the first version failed to catch on with users of the youth-oriented social network.

Snapchat's total ad revenue for the quarter was $229 million, up 62 percent year over year. The all-important daily active users (DAUs) rose sequentially to 191 million, also shy of analysts' projections of 194 million DAUs.

The firm took a stock price hit of as much as 17 per cent upon reporting a revenue of $230.7m (£169.4m) for the quarter which, despite being a 54 per cent jump from the same period past year, fell below the around $245m estimated by analysts.

"When Snap first came to market a year ago, it was a little hard to separate the hyperbole from the facts in terms of market enthusiasm for a company that wasn't, and still isn't any closer to making a profit".

SNAP stock fell a whopping 15.9% after the bell on the company's revenue miss and continuing loss. She has since resumed using Snapchat.

Snapchat made $1.21 per user across its platform this quarter, which is down substantially from the $1.53 it made in the prior quarter. Analysts surveyed by FactSet had estimated an adjusted loss of 17 cents a share on revenue of $244.3 million. More and more users started to move away from the app, while simultaneously daily userbase on Instagram was seen to be rising.

So far, investors don't seem convinced. Drew Vollero, Snapchat's chief financial officer, reported Snap Ads were the company's fastest-growing product during Q1 - specifically, Snap Ads sold via the platform's self-serve programmatic auction-bidding platform which it opened to all advertisers in February of this year.

  • Carolyn Briggs