Snap Inc shares plunged as much as 23.5 per cent on Thursday after the owner of the wildly popular Snapchat app’s user growth and revenue numbers failed to show that it was adequately dealing with rising competition from Facebook.
Snap, which calls itself a camera company, posted its debut quarterly scorecard following its hugely successful IPO in March, reporting slowing user growth and widely missing Wall Street’s revenue expectations.
Snap shares plunged to $17.59, their lowest since the initial public offering on March 2, wiping off more than $6 billion of its market value. The stock had debuted at $17.
“The 7 million daily active users net-adds were not strong enough to disprove the ‘Facebook is crushing Snapchat’ thesis,” which we think will persist for a while,” Barclays analyst Ross Sandler wrote in a client note.
Analysts, including Sandler, on Thursday, revised their expectations for the stock with at least nine brokerages lowering their price targets. The median price target on the stock is $24.
Currently, 12 of the 35 brokerages covering the stock rate it “buy” or higher. Sixteen have “hold” ratings and seven rate it “sell” or lower.
Facebook Inc had also plunged after posting results for the first time in 2012, but has since ensconced itself as a Wall Street darling by transforming the company into an advertising giant.
Shares of Twitter Inc, which competes with Snap and had 328 million average monthly active users in the latest quarter, had also tumbled 24 per cent after its first quarterly report.