Snap got its buns burned yet again by Wall Street in their latest earnings call after founder Evan Spiegel reported earnings that fell far short of investor expectations.
The company missed quarterly revenue estimates by nearly $30m — and missed user growth estimates by almost 4m. (On the bright side, the did only lose 14 cents per share, rather than the 15 cents projected by Reuters… *slow clap*)
They also snagged a big vote of confidence from Chinese internet company Tencent, who reportedly took a 12% stake in the company earlier this month.
So far, their ad tech bet hasn’t paid off
In the face of competing products from Instagram and Facebook, Spiegel and co. have hung their revenue hopes on Snap’s new ad buying platform.
Since their IPO in March, they’ve been beefing up their ad tech via better reporting capabilities and self-serve tools for advertisers — just days before the earnings call in fact, they acquired programmatic ad data company Metamarkets, for under $100m.
Unfortunately for Snap, while FB’s merely imitating their core product, when it comes to ad targeting, they pretty much invented the game, and investors have yet to see the revenue promised from it.
And it’s not just Snap’s numbers that are worrisome…
It’s their apparent lack of foresight. According to one analyst, halfway through last quarter, Snap “said they could grow revenue $60m sequentially from the June quarter. They came in about a third lower.”
In other words, Spiegel’s thumbs are sending snaps that his company can’t cash, and it’s eroding investor confidence.
Hey, we’re all for swinging for the fences, but Snap’s inability to even come close to its projections shows either a lack of visibility or communication with investors on the part of its leadership — and the bigwigs on Wall Street are punishing them for it.