Dancing hot dogs were not enough to save Snapchat from another Wall Street pounding on Thursday. Losses at Snapchat’s parent company have nearly quadrupled in the last three months, the company announced, sending the social media company’s shares to a new low in after hours trading.
Snap Inc lost $443m in the second quarter. The company paid out $242m in stock based payments and associated taxes over the quarter. The mobile app’s revenues rose 153% to $182m, but were below Wall Street forecasts. The company also failed to match expectations for growth, adding 7.3 million new users over the quarter, below the 8 million expected by analysts. Snapchat had 173 million daily active users over the quarter.
Snapchat offers users a messaging service where they can use filters to change their faces and voices. It recently introduced a dancing hot dog which co-founder Evan Spiegel called “the world’s first virtual reality superstar”. The prancing fast food animation has now been seen by 1.5 billion people, he said.
Snap Inc’s news sent the company’s share diving. Snap Inc fell more than 16% after the figures were released to $11.50 – less than half the $27 they were worth after the company went public.
Snap Inc’s misfortunes are weighing heavily on Silicon Valley as more loss making tech companies, including Uber and Airbnb, consider stock market sales.
The five-year-old company went public in March in one of the most hotly anticipated initial public offerings of the year. The company was initially valued at close to $30bn but is now valued at close to half that price.
The Los Angeles-based company started life as a messaging service with disappearing messages. But it has morphed into a mobile app that offers news and entertainment stories and a location-based platform for advertisers keen to reach its largely millennial audience. It now describes itself as “a camera company” and released its first piece of hardware, glasses with built-in cameras, last year.
Both Facebook, which owns Instagram, and Google have moved to copy many of its innovations. Spiegel rejected a $3bn offer for the company in 2013. Google reportedly expressed an interest in buying the company for $30bn last year.
Employees will be able to publicly sell their shares for the first time next week, presenting another test of confidence in the company. On a call with analysts Spiegel said he and co-founder Bobby Murphy would not sell their shares. “We believe deeply in the long term success of Snap,” he said.