Snap CEO Evan Spiegel thinks the company can become profitable soon, but investors have not shown great confidence in the firm.
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| Snap wants to become profitable in 2019. Snapchat co-founders Bobby Murphy, chief technology officer of Snap Inc., and Evan Spiegel, chief executive officer of Snap Inc., smile at each other after ringing the opening bell at the New York Stock Exchange on March 2, 2017 in New York City. Photo: Drew Angerer/Getty Images |
By Alex Perry, International Business Times
It may have been a new day, but the story for Snap, Inc. (SNAP) was the same on Friday. The struggling photo-sharing app maker had another bad day on the stock market, despite an extensive statement from CEO Evan Spiegel outlining the company’s path to profitability in 2018.
Snap shares were down 0.7 percent on Friday, CNBC reported. Things were actually looking up for Snap in pre-market trading, but the stock continued its downward trajectory as the day moved on. The optimism early in the day may have come from a memo sent to employees by Spiegel, which Cheddar published in full on Thursday.
The Sept. 26 memo is a seemingly endless series of acknowledgments of some of the things Snap did wrong in the past year, along with Spiegel’s ambitious goals for the company moving forward. Snap’s stretch goal for Q4 2018 was to break even, which Spiegel said the company has made “remarkable progress” towards achieving.
Spiegel also said Snap’s goal is to achieve full-year profitability for 2019. However, he acknowledged that 2018 has been challenging for the company, largely due to a wholesale app redesign at the end of last year. The controversial change caused the app to lose daily active users in Q2.
“There were, of course, some downsides to moving as quickly as a cheetah,” Spiegel wrote. “We rushed our redesign, solving one problem but creating many others.”
Achieving profitability will require business changes, per Spiegel’s memo. The CEO said Snap needs to do a better job of communicating with its advertisers about how to use the app. Perhaps not coincidentally, Cheddar reported that marketing VP Steve LaBella would leave the company in November.
Several Snap executives have left the company since its March 2017 IPO, including top business exec Imran Khan in September. Since going on the stock market, Snap’s share price has cratered to less than $8 per share as of this week. It fell below $10 per share in September and never recovered.
The company’s main product has not been able to reliably compete with Facebook in recent years. Its daily active user count has fallen below both Facebook Stories and Instagram Stories, and those are just features of larger apps.
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