Snap Flunks Its Third Quarter Earnings Test

Snapchat co-founders Bobby Murphy, left, and Evan Spiegel, chief executive officer of Snap Inc., at the New York Stock Exchange on March 2. Snap shares have recently fallen below their IPO price on weak growth forecasts
AFP/Drew Angerer

Snap Inc, the parent company of the messaging app Snapchat, turned in another quarter of disappointing earnings Tuesday.

Shares of Snap fell by 20 percent in after-hours trading. This was the third quarterly report from Snap since its IPO and the third time that it came up short of Wall Street’s expectations.

Snap reported that daily active users grew by 3 million in the third-quarter, a number far short of what many analysts expected. Analysts had forecast the company would add close to 9 million new users, for growth of around 5 percent.

Snap reports revenue of $207.9 million, below the $235.5 million analysts expected. The company said it lost $0.14 per share.

The earnings disappointment was particularly striking because expectations for Snap’s third quarter have been on the decline for months. Back in February, the analyst consensus saw the company earnings $297 million.

Snap is seen as facing competition from Facebook’s popular clones of Snapchat. Tuesday’s report suggests that the company is struggling to grow users and ad-revenue even more than analysts believed.