Snap is waiting to lose more users, the stock plunges

(Reuters) – Snap Inc. lost more users than expected in the third quarter, as Wall Street continued to face an unpopular overhaul of its Snapchat photo messaging app and Facebook Inc.'s fierce Facebook Instagram competition.

Daily active users are expected to decline further in the next quarter, said Tim Stone, Snap's CFO, during a teleconference with analysts, which would mark the third consecutive quarter of declining user numbers.

Snap shares, which have lost more than 52% since the beginning of the year, have dropped 10% after office hours, as the company failed to convince Wall Street that 2019 would be better.

During the conference call, Mr. Stone raised the hope that Snap had set a goal of achieving annual profitability in 2019. This ambition was defined in a memo circulated by CEO Evan Spiegel at the beginning of the month.

"Keep in mind that an internal stretching goal is not a forecast and is not an orientation," Stone said.

The number of active daily users on Snapchat fell to 186 million euros in the quarter ended September 30, from 188 million three months earlier. The number of daily active users rose to 178 million in the quarter of the previous year.

Spiegel said the company plans to add users by targeting older users in the United States and Europe and expanding internationally to reach the 13 to 34 age group, the demographic of the application .

But one of Snap's biggest problems is that she "does not have a clear vision of how to overtake the under-30 population in a crowded social media landscape," said analyst Jessica Liu. Forrester.

According to Refinitiv data, the latest user figure, largely followed by investors and advertisers, is also lower than the average estimate of 187.56 million analysts, analysts said.

Wall Street was expecting the number of Snapchat users to reach 192.84 million next quarter.

The new Snapchat app, which aims to create a more personalized service, has struggled to attract more users since its launch last year and newer versions have been criticized for their confusion.

The number of active advertisers on Snapchat remains low compared to Facebook and Instagram, but it is growing steadily, Stifel analysts said Wednesday, citing data provided by Merkle.

Even so, the company has exceeded analysts' revenue forecasts and average revenue per user has jumped. Revenue growth has been boosted by the increased adoption of the company's programmatic advertising platform, said Snap CEO Evan Spiegel in his prepared remarks.

Snap's total sales jumped about 43 percent to $ 297.7 million, exceeding Wall Street's expectations of $ 283.2 million.

Average revenue per user was $ 1.60 in the third quarter, compared to $ 1.17 a year earlier, driven by growth outside North America.

The net loss was reduced to $ 325.1 million or 25 cents per share from $ 443.2 million or 36 cents a share a year earlier. On an adjusted basis, Snap lost 12 cents a share, while analysts expected a loss of 14 cents per share.

Snap also announced revenues of between $ 355 and $ 380 million in the fourth quarter. Analysts expected revenue of $ 371 million.

Earlier this month, Snap announced the creation of new scripted shows for Snapchat to attract users and increase the time they spend on the app. Snap said the serialized episodes will be funded by advertising and fast for mobile viewing.

Snap announced Wednesday that it hired Jeremi Gorman, Amazon's global advertising sales manager, as a sales manager. He also hired Jared Grusd as head of strategy. Grusd was the CEO of the HuffPost media site.