Snap's earnings show growth despite stiff competition from Facebook
Snap appears to be making a comeback, attracting new users after it released a new version of its augmented reality sunglasses. The parent company of ephemeral-messaging app Snapchat said Tuesday that it had 210 million daily active users, an increase from the 203 million daily active users the company reported in the second quarter.
Since it went public in 2017, Snap has continued to face stiff competition from other social networks, including Instagram, a Facebook-owned service that's successfully copied Snapchat's most popular features. For example, Instagram rolled out a feature called Stories, which lets users send photos and videos that disappear in 24 hours, like Snapchat's marquee feature.
In October, Instagram took another page out of Snapchat's playbook when it launched a camera-first standalone app called Threads for messaging close friends.
The competition with Facebook properties has prompted Snap to keep an eye on the social network's "hardball tactics." Snap compiled a dossier called Project Voldermort, which is named after the fictional antagonist in the Harry Potter book series, that details Facebook's activities. Snap reportedly spoke with the Federal Trade Commission, which is looking into antitrust concerns about Facebook, and shared the material, according to The Wall Street Journal. The attorneys general of 47 states are also investigating Facebook.
But analysts say Facebook isn't the only competitor Snap has to worry about, pointing to the growth of short-form video app TikTok.
"Competition from upstart social platform TikTok is still looming, however, and it could lead to lower engagement for Snapchat in the future, because both platforms target the youth audience," said eMarketer Principal Analyst Debra Aho Williamson in a statement.
Snapchat has been trying to rope in new users with new augmented reality features and by revamping its Android app. In August, the company unveiled the third version of its AR sunglasses Snapchat Spectacles.
Snap reported $446 million in revenue in the third quarter, above the $434.8 million that analysts surveyed by Thomson Reuters expected.
The company posted a loss of 4 cents per share, beating expectations of a loss of 5 cents per share.
Snap's stock, though, dropped in after-hours trading after the company provided weak guidance for the fourth quarter. Shares dropped by about 4% to $13.43 per share in after-hours trading.
Snap said revenue in the fourth quarter is expected to be $540 million to $560 million, which could be lower than the $555.43 million in revenue that analysts estimated.
Originally published Oct. 22, 1:18 p.m. PTUpdate, 1:44 p.m.: Includes statement from analysts and stock price.