Published: Thu, August 09, 2018
Economy | By Shawn Conner

Snapchat’s Controversial Redesign Blamed for Loss Millions of Active Users

Snapchat’s Controversial Redesign Blamed for Loss Millions of Active Users

Snap picked up a big backer in Saudi Arabia's Prince Alwaleed bin Talal, who announced soon after the second-quarter results he had bought a 2.3 percent stake for $250 million in May. Daily users of the photo and video messaging app fell for the first time in the company's history, to 188 million in the second quarter from 191 million in the first. And while those on the Street were expecting the company to report a loss of 17 cents a share, Snap reported a loss of 14 cents a share, again bettering Wall Street estimates.

The company behind Snapchat posted revenue of $262.3 million in the period, also topping the estimate of $247.2 million.

More than six months later, Snap is now blaming the same design for a decline in its daily active users.

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Shares of Snap bounced between gains and declines in extended trading following the report, after climbing less than 1 per cent to US$13.12 in NY. Overall though, Snapchat saw a small increase in its Monthly Active Users.

Analysts, on average, had expected an adjusted a loss of 18 cents per share on revenue of $249.8 million.

Advertising revenue is up 48 percent year-over-year as well, making the platform all the more enticing to the potential advertiser. Analysts on average expected Snap to gain almost 2 million users in the second quarter from the first quarter, according to Thomson Reuters I/B/E/S.

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The prince had previously been rumoured to be interested in investing in Snap prior to its IPO, though in 2015 a source told Reuters there were "no plans to invest".

Snap lost about 1 million users in each of its three geographic reporting regions: North America, Europe and rest of world.

The ephemeral social media company revealed in its latest earnings report that its daily active user count has dipped, attributing the decline to early frustrations with its new-look app.

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These drops came as the company embarked on a huge redesigned and also committed to building hardware in the form of camera-toting spectacles. Chief Executive Evan Spiegel said in prepared remarks that the redesign was the primary reason for usage slipping, but he credited the changes for increasing viewership of key ad-supported content this year.

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