Unable to sustain the momentum that boosted its earnings in the previous quarter, Snap stock plummeted 17% in after-hours trading. The plunge comes after similar downturns in recent months as celebrities ranging from Kylie Jenner to Chrissy Teigen have publicly slammed the new app, which Snap execs acknowledged have left some advertisers skittish.
Snap fell short of analyst expectations of growth of 7 million new users for the quarter versus the same period in the previous year, bringing in just 4 million, to reach a total of 191 million worldwide. Revenues for the quarter reached $230.7 million, up 54% year over year. It amounted to a loss of 17 cents per share, consistent with analyst expectations.
Also fueling the selloff: Snap warned investors that a deacceleration of ad revenues was likely in the coming quarter before picking up again in the second half of the year.
Spiegel explained the company’s reasoning for separating friends and creators in Snapchat’s Discover platform was sound because it kept users from having their connection to their closest friends drowned out from pro creators who publish frequently.
“We are already seeing signs of stabilization among users, but still have work to optimize design among Android users,” Spiegel told reporters and investors.
He said completely rebuilt Snap app for Android will roll out in the third quarter of the year. For now, select elements of the changed Snap app on iOs will be integrated into the Android version.
Spiegel also touted Snapchat’s growth in coverage of the Winter Olympics in South Korea, noting 81 million users watched on Discover in nine languages, surpassing the audience that showed up to the app for the Rio Games in 2016. An average of 10 million users tuned in every day of the game, which included live streaming excerpts of the competition for the first time on the platform.
Spiegel spoke of the challenges Snap is encountering supporting very different sets of needs for the creators and average subscribers. “We want to do both really well,” he said. “We think the redesign brings us closer to accomplishing that mission.”