After Snap released its earnings report on Tuesday, Spiegel got on a conference call with analysts and acknowledged a series of mistakes and shortcomings. We're willing to take that risk for what we believe are substantial longterm benefits to our business.
That's hardly the kind of talk that inspires confidence.
Analysts on average were expecting revenue of $236.9 million, according to Thomson Reuters I/B/E/S. They fell by 16pc as Wall Street reacted to Tuesday night's third quarter results, which revealed a sharp slowdown in user growth, continuing losses, and a $40m writedown on Spectacles, the camera-equipped sunglasses that it put on sale a year ago. The shares were sold at an average price of $12.50, for a total transaction of $2,438,750.00.
A lot of people are having trouble using Snapchat. Snap also confirmed reports that its major foray into hardware, Snapchat Spectacles, had been a failure and cost the firm almost $40 million.
Alright, so being a camera company in the iPhone age was a bit of a moonshot. Many users find the app hard to use compared to Instagram's sleek and intuitive interface, so it's believed Snapchat will be stripping things back and going for a more "professional" look compared to the relatively "cheap and cheerful" aesthetic it now boasts. When the company went public, many said that its advertising engine was unproved, especially on the scale needed to fight with those advertising giants.
Snapchat will also start sharing revenue with its most popular creators. Like Twitter before it, however, Snap has identified a potential problem that could hurt its evolution: its own devoted users.
Ad rates also took another fall, and in what is an effort to combat slow user growth, Snapchat CEO Evan Spiegel announced that the app is set to undergo a redesign. Facebook has already made its own version of Snapchat Stories for its primary network and Instagram.
"Tencent and Snap are not obligated to disclose changes in Tencent's ownership of our Class A common stock, so there can be no assurance that you, or we, will be notified of any such changes", Snap writes.