Many investors who bought Snap, Inc. stock during its IPO are now frustrated by how much it is currently losing. It’s fortunate, therefore, that stock brokers offering CFDs on SNAP enable traders to take advantage of bearish movements, as well as bullish ones.
After the company released a weaker-than-expected earnings report for the 3rd quarter of 2017, investors started selling SNAP stock, driving the price down by 22% during the week ending November 10th. It then slightly bounced back during the following week, especially after Chinese tech company Tencent announced that it had bought Snapchat shares worth around $145 million.
The company’s revenues of $207.9 million, while representing an impressive rise of 62%, fell well short of the expected $236.9 million. Its number of Daily Active Users (DAUs) rose to just 178 million, compared to 181.8 million the company had predicted. In addition to these disappointing figures, Snap, Inc. also tripled its net losses to $443.2 million.
The main challenge for Snap is how to attract more long-term users with a platform that is widely considered quite difficult to use. While Jeremy Liew, Snap’s first backer, once said that the unintuitive interface was the key to the company’s success – especially among younger users, Snap SEO Evan Spiegel is now saying that the company is redesigning the application “to make it easier to use”. It’s too early to know what will be the effect on sign-ups. It could be great news, enhancing the app experience and increasing the number of DAUs, or it could be disruptive for the business, particularly in the short term.
It also appears that the company has had difficulty selling its wearable camera glasses, Spectacles. Snapchat now faces the challenge of dealing with large inventories of unsold units – “hundreds of thousands” according to some sources. Many Spectacles owners didn’t really enjoy the product, and stopped using it after just a month. The company is said to have taken a $40 million write-down as a result of misjudging demand.
During the earnings call, Spiegel said: “We were very excited about Spectacles by the initial reception, [and] because we were so excited, we made I guess the wrong decision. […] Ultimately, we weren’t able to sell as many Spectacles as we thought we had been able to, based on our early adoption“.
Snap’s leadership has certainly made some mistakes so far. Time will tell if the upcoming changes to the app will be helpful to its stock price. Whether you are bullish or bearish on Snap, remember that with stock trading broker UFX, you can take advantage of competitive trading conditions to go long or short on the company, with the aid of some of the most advanced charts and trading tools in the industry.
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