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Controversial Redesign Blamed For First Quarterly Drop In Daily Users For Snapchat

Controversial Redesign Blamed For First Quarterly Drop In Daily Users For Snapchat
The first decline in the number of active daily uses in Snapchat after the company introduced a controversial redesign was announced by Snap, the parent firm of the social media platform.
Despite this the analysts were presently satisfied with the revenue figures reported by the company and as a result the shares of the company surged temporarily before going down because of signals of enduring weakness.
Both revenue and loss figures reported by the Los Angeles company were better than the expectations of Wall Street. There was an increase of over 11 per cent in after-hours trading in the shares of the company partly because of the news of investment of $250m in the company from Saudi prince Alwaleed bin Talal.  However, stocks dropped 2 per cent at $12.90.
Snap is facing a tough battle to keep itself relevant compared to Facebook-owned Instagram and a number of analysts were anticipating a flat growth in the number of active daily user numbers. However, Snapchat reported a total drop of 2 per cent in the number of daily user to reach 188 million users compared to an expected 193 million.
On in contrast to that number, the company reported better than expected second quarter revenues at $262.3m compared to the market estimates of $249.8m, marking a 44 per cent gain compared o the same period last year. The loss reported by the company also beat market estimates at $0.14 earnings per share comparted to market expectations of $0.18. on the overall, a loss of $353m, or 27 cents a share was reported by the company compared to a loss of 36 cents a share in the same period last year.
This season has been a tough one for the teach sector where poor numbers and a consequent drop in shares were experienced by Twitter and Facebook. The lackluster performance by Snapchat was blamed on the redesign issue by CEO Evan Spiegel in his dialogue with analysts.
Snapchat’s drop in daily users “was primarily driven by a slightly lower frequency of use among our user base due to the disruption caused by our redesign,” Spiegel said. “We have been working hard to iterate and improve Snapchat based on the feedback from our community”, he added speaking six months after the relaunch.
There had been a 44 per cent increase in share on the first of trading that Snap went public in 2017. But within three months they were back at the $17 IPO price. There was a drop in share price by as much as 24 per cent after the company reported its first quarter earnings report last year.
Snapchat has remained plagued by the same problem that it had faced since its inception – it being recognized to a popular platform for the teens and young adults but has never managed to go beyond that group in any significant manner because of lack of attributes of the platform.

Christopher J. Mitchell

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