The stock market has severely punished the makers of the photo app Snapchat for the first drop in sales. The share lost almost a fifth of its value in one fell swoop. The turnover of the operating company Snap fell in the last quarter by seven percent to 988.6 million dollars (896.3 million euros). Snap had announced the decline three months ago. Previously, the service was known for explosive growth.
The number of daily active Snapchat users increased from 375 to 383 million within three months. The quarterly loss, meanwhile, improved to $328.7 million from $359.6 million a year earlier, Snap said after the US market closed on Thursday. After the figures were presented, the share temporarily lost 20 percent and ended after-hours trading down 18.29 percent.
Company experiments with AI chatbot
Snapchat originally grew up with photos that disappear on their own. In the meantime, however, the company is relying on the combination of digital effects with the real world on a large scale. The business with digital fittings has become more important for Snap because online advertising, which has been the mainstay so far, is weakening. The company recently presented a digital mirror, which also wants to be sold in brick-and-mortar retail. The company is currently experimenting with a chatbot based on artificial intelligence in the app.
Snap is being hit by the general slowdown in the online advertising market, which is also being felt by top dogs Google and Facebook. But there are other problems too. After Apple’s measures for more privacy on the iPhone whirled many previous advertising models, Snap set up new processes that are not yet running smoothly. On the iPhone, app providers like Snap must explicitly ask users for permission if they want to track their behavior across different apps and services for advertising purposes. Many refuse.
In the conference call after the numbers were presented, an analyst asked management directly whether it wouldn’t be better to scale back investments in so-called augmented reality (AR), such as digital fittings, until Snap had more money again. Investor confidence in Snap is at stake, he warned. Co-founder and boss Evan Spiegel was then convinced that the advertising business would pick up again.
