Snap Inc.’s ugly year turned even uglier on Friday, with shares of the Snapchat parent company dropping to a new all-time low as the company struggles to curb its user exodus.
Snap shares dropped 17 percent on Friday morning, falling below the $6 per share mark for the first time. Snap’s stock, since opening the year near $15 per share, has cratered more than 60 percent.
It’s also a far cry from Snap making its Wall Street debut at $17 per share in March 2017.
The issue for Snap: user growth — or lack thereof. Snapchat lost 2 million daily users when the company reported its Q3 financials on Thursday. It was the second straight quarter Snapchat’s user growth declined, after it lost 3 million daily users during the previous quarter. CEO Evan Spiegel pointed to the company’s ill-fated app redesign as the reason for users jumping ship. The company now has 186 million daily users, after starting the year with 187 million. Snap forecasted its user growth would remain stagnate as it closes out 2018.
The user decline appears to have overshadowed the maturation of its advertising business for most shareholders. Snap reported its best quarterly revenue in its history on Thursday, pulling in $298 million in sales. Spiegel told analysts last year the company’s “biggest issue” was “education” when it came to advertising — on showing businesses it can connect with users. Snapchat is connecting users with relevant ads, but its user base is dwindling.
Compounding matters for Snap is that its chief competitor, Instagram, has continued to thrive, often at Snapchat’s expense. Instagram Stories — the pictures-and-video thread feature Instagram essentially copied from Snapchat — now has 400 million daily users, more than double Snapchat’s entire audience.
“We believe that competition (particularly from Instagram) is irreversibly reducing SNAP’s opportunity to deliver on long-term investor expectations,” Evercore analyst Anthony DiClemente said in his note shared with TheWrap earlier this month.
Snapchat is still wildly popular with teenagers. And the company has more original content in the works, including a new show from the Duplass Brothers. Snap also made two two big hires this week, bringing on a new chief strategist and chief business officer.
But Snap’s dwindling share price threatens to scare off many of its employees. 40 percent of Snap’s 3,000 employees said they didn’t plan on staying with the company, according to a recent internal survey obtained by Cheddar earlier this week. That threat is only exacerbated if the company is unable to attract new users — or ones that left Snapchat in the first place.