Snap Stumbles Through Another Disappointing Quarter

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User growth was a mixed bag. The user base grew by 21 percent over the past year to 173 million, which was slower than analysts had expected. But the bulk of that growth came from North America, showing that the company can still expand in highly lucrative advertising markets like the United States. The average amount of revenue made per user increased by 109 percent over the year to $1.05.

“We’ve been working closely with our advertisers to improve our offerings and become a more integral part of their strategy,” said Imran Khan, the chief strategy officer at Snap. He said that existing customers are also spending more money with the company.

Snap shares fell by more than 12 percent after the company released its numbers. The stock’s performance is being closely watched because as a measure of tech start-ups in the public markets. Snap and the online meal kit company Blue Apron, which lowered its offering price when it went public in June and is dealing with a declining stock, are casting a pall over other potential initial public offerings.

For Snap, there have long been signs that it would face bumps as a public company. Before its I.P.O., the company said that it was losing money and made no guarantee that those losses would subside. Snap also said that its user growth rate was slowing and that it did not have a firm international expansion plan.

“Snap was massively overvalued because, as a private company, it could set a valuation based on the opportunity for growth,” said Brian Wieser, a senior research analyst at Pivotal Research Group.

Evan Spiegel, a chief executive and founder, and Bobby Murphy, another founder of Snap, also maintain control of the company’s voting rights. That means that no matter how dissatisfied shareholders become, they have no direct say in corporate strategy or management. If shareholders are unhappy, the only way they can make their voices heard is to sell their shares.

Mr. Spiegel said during a call with analysts that neither he nor Mr. Murphy would sell their stock this year. “We believe deeply in the long term success of Snap,” Mr. Spiegel said.

For a few months, Snap’s stock stayed above its I.P.O. price. But investor doubts began to set in as Snap’s user growth continued to slow, especially as rivals like Instagram began copying innovative features that once set Snapchat apart, including augmented reality images and disappearing content.

More alarmingly, concern over Snap’s advertising business started to rise. Some brands are beginning to question whether Snapchat is a niche product, like Twitter, or an essential piece of their digital marketing strategy, like Facebook or Google, said several advertising buyers.

Last month, Morgan Stanley, which helped underwrite Snap’s I.P.O., issued a report on the company that questioned the measurement tools that Snap makes for advertisers. These tools are regarded as subpar compared with the ones offered by Facebook, which is important because the tools help brands determine whether an ad was effective.

“The reality is they still lag behind most of the competition in fundamental audience targeting and measurement,” said Sean Corcoran, an executive director at MullenLowe Mediahub, a digital advertising firm. Mr. Corcoran said that it was more difficult to target ads at particular Snapchat users and to measure clicks on ads in Snapchat compared with other social networks.

Snap has introduced new tools for advertisers this year to make it easier to buy and manage ads on Snapchat. It also partnered with companies that can help measure and predict the effectiveness of specific marketing tactics on Snapchat. Snap now measures whether customers shop in stores after they see ads and in June, it confirmed it acquired a start-up called Placed that tracks retail foot traffic.

“We’re encouraged by the early performance of our self-service platform, which makes it easy for advertisers of all sizes to reach our unique audience,” said Mr. Khan.

Correction: August 10, 2017

An earlier version of this article misstated the Wall Street estimate for Snap’s earnings. The estimate was 33 cents a share, not 15 cents a share.

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