Snap Falls Apart

By Douglas A. McIntyre Published Aug 31, 7:30AM EDT

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Snap Falls Apart — © Martin Barraud / Getty Images

The media has reported that Snap Inc. (NYSE: SNAP | SNAP Price Prediction), the social media company, will fire 20% of its staff. Verge wrote that this could be as many as 1,000 people. It is another setback for CEO Evan Spiegel, who should have been pushed out years ago. He has held the job since May 2012.
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In late July, Snap’s shares dropped over 20% as it reported a brutally poor quarter. According to CNBC, management said, at that time: “forward-looking visibility remains incredibly challenging.” Spiegel has been in his job long enough that this was an unacceptable excuse.
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It is shocking that Snap does not do better financially. It has 347 million daily active users. Management claims that over 75% of people ages 13 to 34 use Snap across a total of 20 countries. Other than Facebook, it would be hard to find such impressive numbers for a social media company. Spiegel said second-quarter results “do not reflect our ambition.” However, he did not say what that ambition is.

Snap’s growth was slowed for what was once a “hot” media company. Revenue rose only 13% in the most recent quarter to $1.1 billion. Its loss grew a massive 178% to $422 million. It is hard to imagine how this was possible.
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Snap still has about $5 billion in cash and securities. It would be better to return that money to shareholders than to waste it in future quarters.
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The most damning number for Snap and Spiegel is that the stock has sold off almost 80% this year. Few stocks have savaged investors so completely. And the process does not appear to be over.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.