Is There Any Reason Left to Buy Snap Stock?
Just because Chinese internet giant Tencent (NASDAQOTH: TCEHY) is willing to throw millions of dollars more at vanishing message app maker Snap (NYSE: SNAP) doesn't mean you should follow its lead. The social media platform-cum-camera company reported yet another dismal quarterly earnings performance, and Tencent increased its stake in the company to 12% as a vote of confidence, but there's little to recommend an investment here.
In its third-quarter report, Snap said revenue rose 62% year over year to $208 million, but Wall Street had been expecting as much as $239 million. Worse, losses widened dramatically, going from $124 million last year to a whopping $443 million this year.
Even worse, daily active user growth is stalling and will likely soon turn negative. The number of active users rose to 178 million, up 16% from a year ago, but a far cry from the 63% growth it achieved in the third quarter of 2016. The rate of growth in daily active users has been steadily declining for a year now, and the step down each quarter suggests that within the next few quarters it will be posting declining numbers of users.
Source: Fool.com
