Shares of Snapchat parent company Snap Inc. were down as much as 7 percent Wednesday morning after the company said that its coronavirus-related user boost fizzled out sooner than it had anticipated.
The disappearing-photo app said daily active users rose 17 percent year-over-year to 238 million in the second quarter, in line with Wall Street’s forecasts.
Snap, however, forecast between 242 million and 244 million daily active users in the current quarter, below analysts’ target of 244.8 million, noting that the coronavirus surge was no longer bringing the results they had anticipated.
“At the onset of widespread shelter in place orders, as people sought to stay connected and entertained from home, we observed an increase in daily active users that informed our initial estimate,” Snap CFO Derek Andersen said in a statement. “This initial lift dissipated faster than we anticipated as shelter in place conditions persisted.”
Shares of Snap were down 5.6 percent Wednesday morning, at $23.40.
Ad sales jumped another 17 percent to $454.2 million during the quarter, above estimates of $440.8 million. Snap cited its reputation as a safe ad platform focused on friendly interactions — a stark contrast with Facebook which is in the midst of a widespread advertiser boycott.
“The growing focus on brand safety and privacy across the entire industry places us in a unique position of strength as we have invested in these areas from the beginning of our business,” Snap Chief Executive Evan Spiegel said during an earnings call with analysts.
Snap’s net loss grew to $326 million, or 23 cents per share, from $255.2 million, or 19 cents per share, a year earlier.
Andersen said third-quarter revenue growth was 32 percent through July 19, but expected the pandemic to slow that growth to 20 percent by the end of the quarter.
With Post wires.
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