Snap released their absolutely dreadful Q1 results late yesterday.
The shares tanked 17% in after hours trading below $12. Our 2018 target of $5.00 is well within reach. The company provided guidance for Q2 – it is all very bad. They expect new user growth to ”decelerate substantially”.
The company released a controversial app redesign in February and is still being impacted by the backlash. Average revenue per user fell significantly while the cost of revenue per user increased. Its daily active users also missed forecasts. CEO Evan Spiegel says he wants to focus on optimizing the redesign in the upcoming quarter: “The redesign lays the foundation for the future of both our communication products and our media platform, and we look forward to doubling down on both.”
Too little too late, say we.
Two more things that should sound the alarm bells:
- Snap is burning through a ton of cash and we are hearing that a lot of the top talent is/will be exiting in droves in the coming days and weeks.
- Snap currently sports a very hefty $17B market cap. Look for that to sink to $5B by year-end – hence our +/- $5 target.
As we expected and have been saying very strongly since before the IPO, Snap’s current business model is a bust and will never work – ever.
RIP Snap 2017 – 2019 The Spectacles Company
A spectacle indeed.
Jeff and the IBR Team
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