Why Snap Stock Was Sliding This Week
Snap Inc. (SNAP) shares fell nearly 17% this week following its second-quarter earnings report, which revealed a revenue of $1.35 billion, a 9% year-over-year increase, but a deeper net loss of $263 million. The company also announced plans to raise $550 million through senior notes with a 6.88% interest rate, maturing in 2034. Despite the challenges, Snap expects to increase daily active users to 476 million and revenue between $1.48 billion and $1.5 billion in the third quarter.
This was hardly a good week to be a Snap (SNAP -3.08%) shareholder, as the social media company's shares were getting rocked after it published its second-quarter earnings report. Outside of that, the company announced it was going to the well in an effort to raise more capital.
The stock stumbled toward the weekend with a nearly 17% week-to-date fall in its price as of Friday before market open, according to data compiled by S&P Global Market Intelligence.
Not the most inspiring quarter
The quarter saw Snap book revenue of just under $1.35 billion, representing a rise of 9% year over year. That percentage rate increase matched that for daily active users (DAUs; a critical metric for the social media industry), which totaled 469 million. Another industry yardstick, average revenue per user (ARPU), however, only inched up by $0.01 to $2.87.
Image source: Getty Images.
Meanwhile, the company's net loss deepened, to almost $263 million ($0.16 per share) from the year-ago deficit of nearly $249 million.
This performance was broadly in line with analyst expectations. The consensus pundit estimate for revenue matched the actual $1.35 billion, while that for net loss was $0.15 per share.
In a conference call, Snap management proffered guidance for its current (third) quarter, saying it expected a rise in DAUs to around 476 million, with revenue landing at slightly under $1.48 billion to a bit over $1.5 billion.
New debt to come
Snap soon followed its earnings release announcement with an announcement that it was aiming to raise $550 million in fresh borrowings (upsized from its original target of $500 million). The company is floating a series of senior notes at that aggregate principal amount, with annual interest of nearly 6.88%. They mature on March 15, 2034.
