Snap (NYSE:SNAP), the parent company of the social media app Snapchat, came in ahead of Wall Street’s expectations for both revenue and profit in the third-quarter, but investors punished its shares as it continued to bleed users.
Its losses per share narrowed in the quarter to $0.12 per share on an adjusted basis, compared with the consensus estimate of $0.14 per share forecast.
In the three months until September 30, Snap’s daily active users dropped to 186 million, down from 188m in the previous quarter. While that figure was in line with analyst’s projections, investors viewed the loss of 2m users as substantial.
Its revenue also soared in the quarter to almost $298 million, zipping past Wall Street’s estimate of $283.2 million.
Investors applauded the results at first, sending Snap shares up more than 7% after the bell on Thursday before turning negative and pushing shares down by 8% to $6.42.
Snap’s redesign has faced challenges attracting more users since its introduction last year and has drawn criticism in the market.
Looking ahead, Snap projects its fourth-quarter revenue to fall in a range of $355 million to $380 million.
Snap is also reaping more profits from its users than had been anticipated, reporting an average revenue per user of $1.60 against the consensus estimate of $1.52 per share.
READ: A clutch of Wall Street analysts downgrade Snap, sending its shares plunging
Wall Street wasn’t expecting much from Snap this quarter. And Stifel analyst John Egbert was one of a number of analysts to pare back his price target on the social media app this month, cutting it to $9 from $15, according to published reports.
Citi analyst Mark May was even gloomier, slashing his target to $7 from $8 while Evercore ISI’s Anthony DiClemente made the same move, cutting his rating to $7 from $9.
Snap is still facing fierce competition from Facebook-owned Instagram, which is mimicking many of its most popular aspects such as photos that erase automatically and videos.
It’s also hemorrhaging staff, having bid goodbye over the last year to its chief strategy officer Imran Khan as well as its chief financial officer Drew Vollero and its vice-president of marketing Steve LaBella.
Twitter posted a drop in its global monthly active users when it unveiled its third-quarter earnings before the opening bell Thursday, but some stemmed from the purging of fake accounts.