(Reuters) - Snap Inc fell short of Wall Street forecasts for revenue and regular users on Tuesday after a redesign of its Snapchat messaging app turned off some long-time fans and advertisers, sending its shares tumbling 16 percent.
Revenue growth will likely slow substantially in the second quarter, the company said, showing it still faces an uphill battle after an app overhaul meant to fend off bigger rival Facebook Inc as it adds Snapchat-like features.
The number of daily active users on Snapchat, crucial for generating advertising revenue, rose to 191 million in the quarter ended March 31, short of consensus expectations of 194.15 million, according to Thomson Reuters I/B/E/S.
The figure was 15 percent higher than a year earlier, compared with growth of 18 percent in the previous quarter.
Snap shares plunged 16.5 percent to $11.77 in after-hours trading, extending a slide in the stock since February. Shares had surged 48 percent on Feb. 7, to $20.75, topping Snap’s IPO price of $17 for the first time in months, on hopes that the redesign was working. The stocks has mostly fallen since.
“The redesign didn’t just make users unhappy, it also made advertisers more concerned,” said eMarketer analyst Debra Aho Williamson. “That’s not a good position to be in.”
On the plus side, Williamson said, “Snapchat loyalists are highly engaged, using the app multiple times per day. And Snapchat’s ad formats are still among the most creative.”
For the quarter ended in March, total revenue rose 54 percent from the same period a year earlier to $230.7 million in what was Snap’s fifth quarterly earnings as a public company. Analysts on average had expected