After middling quarter, Snap will face pressure
Snapchat parent’s stock at all-time low; Street will want reassurance.
Shares of the Los Angeles company that makes the Snapchat messaging app breached an all-time low Friday, following weaker-than-expected second quarter financial results.
They closed at $11.83, down 14 percent, or $1.94. Shares previously traded as low as $11.90.
Snap Inc.’s market capitalization now sits at about $14 billion, or about how much venture capitalists thought the company was worth a couple of years ago when Snapchat had 100 million users.
Snapchat counts 173 million users these days. But the increase has come too slow in the minds of investors, who have equated choppy user growth with diminished money-making potential for the unprofitable company.
Snap Chief Executive Evan Spiegel, who along with his co-founder have enough voting control to direct the firm’s fate, say little has changed in their calculus. Neither plans to dump stock anytime soon, and the company has waved off rumors of a potential $30 billion acquisition offer from Google.
Spiegel told financial analysts Thursday that he’s “very excited” about upcoming features — which Snap is counting on to maintain user interest — and that employees are “having a great time” working on the ideas.
But Wall Street may want reassurances that are a bit more concrete.
Here are three things the Snapchat maker must show three months from now when it reports earnings, or losses, for the July-to-September period.
■ Assurance that Facebook isn’t a killer: Snap said Thursday that about 25 percent of smartphone owners in the U.S. are Snapchat users.
Facebook has about 80 percent penetration, according to third-party measurements, suggesting that Snapchat has plenty of room to grow.
Analysts such as Ralph Schackart at William Blair have suggested investors should wait it out as Snap captures more interest.
“Snap’s slight miss on daily active users and revenue should