Snap Inc. SNAP 1.96% shares plunged as much as 20% after the company said its quarterly loss more than tripled, disappointing Wall Street again as it failed to significantly grow the number of people using its app daily or the amount of money advertisers are spending to reach those users.
For its third straight quarterly report as a publicly traded company, Snap failed to live up to Wall Street’s forecasts for revenue. The results Tuesday marked the latest in a string of stumbles since Snap went public in March, in what was considered the biggest U.S. listing since Alibaba Group Holding Inc.’s initial public offering in 2014.
In a conference call with analysts, Chief Executive Evan Spiegel said Snap would overhaul its signature product, the Snapchat messaging app, and acknowledged he misjudged demand for Spectacles, the company’s one-time buzzy video-recording sunglasses. Snap said it recorded $39.9 million in charges in the quarter, primarily because of excess Spectacles inventory.
The difficulties illustrate the enormous challenges Snap faces trying to wrest away market share from the two companies that dominate digital advertising, Facebook Inc. and Google parent Alphabet Inc.
Snap said revenue in the third quarter rose 62% to $207.9 million. Analysts polled by FactSet expected $236.9 million in revenue.
The revenue haul was the most Snap has logged in a quarter. But it also marked another three months of decelerating growth for a company not yet a year removed from its IPO. In the second quarter, Snap’s revenue more than doubled to $181.7 million.
Snap added 4.5 million daily users during the third quarter, bumping its total user base to 178 million but representing the slowest growth since the company started reporting the figure. Analysts surveyed by FactSet expected Snap would add 8 million new daily users during the quarter.
“We grew our daily active users at a lower rate than we would have liked,” Mr. Spiegel said on the call.
Mr. Spiegel said Snapchat is taking steps to make it easier for people to discover content others are sharing. But Mr. Spiegel issued a rare note of caution, saying “we don’t yet know how the behavior of our community will change when they begin to use our updated application.”