Snap Inc 3Q 2017 Earnings Results Send Shares Plummeting

The Snap 3Q 2017 earnings results were released after closing bell, and the company posted non-GAAP losses of 14 cents per share on $207.9 million in revenue. Analysts had been expecting earnings of 15 cents per share on $236.9 million in revenue. In last year’s third quarter, the company reported losses of 15 cents per share on $128.2 million in revenue.

snap 3q 2017 earnings
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Snap 3Q 2017 earnings

On a GAAP basis, Snap’s losses per share amounted to 36 cents, compared to 15 cents per share in losses a year ago. Adjusted EBITDA was -$178.9 million, compared to -$108.6 million a year ago. The biggest problem in the Snap 3Q 2017 earnings release was the $39.9 million write-down from losses on the Spectacles hardware due to excess inventory and cancellations of inventory purchase.

Snap had 178 million daily active users, missing the 181.8 million that had been expected. Average revenue per user came in at $1.17, a wide miss from the $1.30 that had been expecting. In last year’s third quarter, average revenue per user was 84 cents.

Snap stock tanks on earnings

The company’s stock plunged in after-hours trade following the Snap 3Q 2017 earnings release, tanking by as much as 20% at one point before bouncing. Data from S3 Partners revealed earlier today that short-sellers had been covering their positions leading up to the earnings release.

It was the largest short in the Application Software Sector. Short interest was up 35% since June. It stood at $1.7 billion, but the financial analytics firm said short-sellers covered $115 million of their positions within the last week and $278 million from the year-to-date high of $2 billion, which it touched in the middle of last month.

The plunge in the company’s stock price following the Snap 3Q 2017 earnings release means that short-sellers left quite a lot of profits on the table by covering their positions. S3 Managing Director Ihor Dusaniwsky said before the release that short-sellers had increased their positions before the second-quarter earnings report, which tanked Snap stock.

Snap stock fell as low as $12.10 per share in after-hours trades.