Snap continues to sputter – CNET

Snapchat’s growth just slowed to a crawl.

Snap, the company behind the social network, saw a 5 million climb in daily active users in the third quarter — just 3 percent growth from the second quarter and 17 percent from a year ago — bringing the total to 178 million.

That trails the 300 million daily users on rival Instagram stories. Instagram’s parent, Facebook, boasted a year-over-year 16 percent growth rate — but off a base of more than 2 billion users.

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Snap takes a huge tumble posting a $443 million loss in the third quarter.

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The numbers illustrate the fact that Snapchat still faces stiff competition from Facebook and Instagram. While Snapchat has been successful in attracting younger users, it remains a mystery to a broader audience. Its array of filters and the idea of disappearing messages presents an intimidating barrier for people trying it out. 

On the other hand, Facebook’s Instagram Stories continues to grow at an impressive clip. 

“One thing that we have heard over the years is that Snapchat is difficult to understand or hard to use, and our team has been working on responding to this feedback,” Snap CEO Evan Spiegel said Tuesday in a prepared statement, adding that the company is planning a redesign to make the application easier to use.

“We don’t yet know how the behavior of our community will change when they begin to use our updated application,” Spiegel said. “We’re willing to take that risk for what we believe are substantial longterm benefits to our business.” 

More bad news: Snap also took a $40 million charge to write-down unsold Spectacles.

The company reported a loss of $443.2 million, or 36 cents a share. Excluding one-time items, Snap lost 14 cents a share, narrower than the average analyst estimate of a loss of 15 cents a share, according to Yahoo Finance

A year ago, the company lost $124.2 million, or 15 cents a share.

Snap’s revenue rose more than 60 percent to $207.9 million, but still fell far below analysts’ expectations of $239.5 million.

Last month,research firm eMarketer anticipates Snap’s global advertising revenue this year to hit  $774.1 million this year, markedly down from its previous estimate of $900 million. However, eMarketer expects revenue to grow about 90 percent to $1.47 billion in 2018.

“Despite all of its improvements in ad products and measurement, Snapchat remains in the experimental bucket for many marketers,” the firm said. “They give it high marks for its creative possibilities and its ability to attract a youth audience, but many have yet to make it a must-buy.”

Meanwhile, Snap’s stock remains well below its post-initial public offering peak price of $29.44 as shares have declined nearly 40 percent since going public. Shares fell more than 18 percent to $12.40 in after-hours trading.

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