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Snap Shares Fall on Weak Daily Active User Count

Snap shares were down sharply in after-hours trading on Tuesday after the company beat revenue estimates, but reported slightly lower active users than expected.

For the second quarter, the first that overlapped completely with the COVID-19 pandemic, Snap reported a diluted net loss per share of 23 cents on revenue of $454.16 million. Analysts expected a loss of 22 cents per share on revenue of $442 million on average, according to FactSet.

Snap shares were down as much as 7% following the release.

The company reported 238 million daily active users, representing growth of 17% year-over-year and a slight miss from consensus estimates of 238.5 million.

“We continued to grow our community and business in a challenging and uncertain environment,” said Snap CEO Evan Spiegel in a statement. “I am proud of our team for innovating on new experiences for our community and driving value for our partners, demonstrating the importance of our service in people’s lives. We are grateful that the resilience of our business has allowed us to remain focused on our future growth and opportunity.”

In a press release, Snap highlighted its stable growth in daily actives and its healthy revenue in the face of pronounced market disruptions due to COVID-19.

Snap shares have gained about 29% year to date on improving trends in its user base and advertiser offerings, but competition for attention with fast-growing upstarts, namely TikTok, remains a question on many investors’ minds.

Snap said that users visited Snapchat 30 times per day on average in the quarter, and that the number of users watching shows on the app daily increased by over 45% year-over-year.

Meanwhile, free cash flow was negative $82 million, an improvement of $21 million compared to the year prior.