Snapchat's losses soar, user numbers not so much

Snapchat is competing for ad dollars users and attention with today’s muscular highly profitable and cutthroat Facebook

Snapchat's DAUs came in at 173 million, an increase of 7.3 million over the first quarter's 166 million. Snap also fell short of the Street's revenue expectations.

A Business Insider report earlier this month said Alphabet Inc (NASDAQ:GOOGL) floated a hefty $30 billion offer for Snap previous year, and there might have been other more informal talks beyond that.

But it wasn't all bad news.

The one bright spot for Snap: The company's average revenue per user rebounded by 16 percent in the second quarter to $1.05 compared to the first three months of 2017. On average, analysts anticipate that Snap Inc. will post ($0.56) earnings per share for the current fiscal year.

Snap (NYSE:SNAP) last released its quarterly earnings results on Thursday, August 10th. Revenue and the number of new users rose less than expected. Cowen and Company reiterated an "outperform" rating and set a $26.00 price objective on shares of Snap in a research report on Tuesday, May 9th.

Snap executives, however, expressed confidence during an earnings call with analysts that fresh advertising tools and an increase in the amount of time people spend using Snapchat were among factors positioning the company to excel in the long term.

Most of the concern with Snap has been related to Facebook and Instagram, which are both copying Snapchat's best features and, in some cases, going out of their way to try and highlight that their user base is bigger and more engaged.

Snapchat CEO Evan Spiegel wasn't in a dancing hot dog mood on Thursday.

Spiegel was more focused on the innovation the company did produce, like a new augmented reality character that was viewed 1.5 billion times. He also touted the success of the company's early shows effort, with one called "Phone Swap" getting picked up for TV and another winning an Emmy award.

Snap Inc, formerly Snapchat, Inc, is a camera company. "However, user growth looks grim for Snapchat, which has seen stagnant growth in recent quarters since Instagram launched a copycat "Stories" feature". Loop Capital reiterated a "hold" rating and set a $21.00 target price on shares of Snap in a research report on Thursday, April 6th. The first lockup expired July 31.

Although that's an easy way to grow daily users quickly, Spiegel said, Snap doesn't believe "those sorts of techniques are very sustainable over the long-term".

Snap has not delivered on either front.

As easy as it is to sound the death knell, put on a crying lens and declare that it's the end for Snap and Snapchat, this could easily just be growing pains for the company after rushing its IPO.

"This was a "make or break quarter"-Snap has tremendous potential if it can capitalize on the opportunity in front of it as an alternative platform for advertisers", but the company is "under pressure from multiple fronts".

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