Snap reports Q3 net loss of $443.2M, vs. last year's $124.2M, and writes off $39.9M in unsold Spectacles inventory
better late than never Stuart Dredge / Music Ally : NOVEMBER 8, 2017:SNAP STOCK DROPS AFTER DISAPPOINTING QUARTERLY RESULTS FOR SNAPCHAT Berkeley Lovelace Jr / CNBC : We were wrong on Snap, so we downgraded the stock, tech analyst Mark Mahaney says Kurt Wagner / Recode : Snap CEO Evan Spiegel is redesigning Snapchat because it's too hard to use Ben Munson / FierceCable : As Snap Q3 earnings fall short, CEO vows more ways for creators to monetize content Josh Constine / TechCrunch : Snapchat share price craters on weak revenue and user growth in Q3 2017 Eric Jhonsa / TheStreet : Snap, Like Twitter, Is Learning Just How Hard It Is to Compete With Facebook Patrick Kulp / Mashable : Snap lost $40 million on Spectacles Shira Ovide / Bloomberg : Snapchat Is Having a Crisis of Confidence Mike Murphy / Quartz : It's getting harder and harder to defend Snap being a public company Katie Benner / New York Times : Snapchat User Growth Disappoints in Another Down Quarter Shawn Knight / TechSpot : Snap writes off $40 million in unsold Spectacles inventory Kathleen Chaykowski / Forbes : Snap Shares Plummet Nearly 20% After Revenue, User Growth Miss Estimates Ben Popper / The Verge : Snap's stock price plummets after weak earnings Alex Heath / Business Insider : Snap reports Q3 revenue of $207.9M, up 62% YoY, vs. $235.5M est., as DAUs grew 17% YoY or 3% QoQ to 178M; stock down 15%+ after hours Fortune : Snap Inc. Shares Tumble 18% on Disappointing Growth Alex Wilhelm / Crunchbase News : What Just Happened To Snap — Shares of Snap, parent company … Tweets: @recode : Instagram Stories are still wildly outpacing Snapchat. http://www.recode.net/... http://twitter.com/... Alexei Oreskovic / @lexnfx : Snapchat CEO Evan Spiegel: “we are currently redesigning our application to make it easier to use” Sarah Frier / @sarahfrier : This is huge change. Evan Spiegel has built this product on his instincts. pic.twitter.com/IKEiqSMmVE Bloomberg Technology / @technology : Snap will overhaul its app just nine months after its IPO http://www.bloomberg.com/... via @gadfly http://twitter.com/... Sarah Lacy / @sarahcuda : “Snapchat is squeezing more revenue from each of its users, but the growth has been disappointing to investors” http://www.bloomberg.com/... yep. twitter 2.0: http://pando.com/... See also Mediagazer
Context & Ripple Effects
This quarter extends a rough stretch: two months earlier, Snap had already missed on both revenue ($182M vs. $186.8M expected) and user growth in its first full quarter as a public company, sending the stock down more than 12%. Q3 makes the hole deeper — the net loss nearly quadruples year-over-year to $443.2M, and the $39.9M Spectacles write-off is an explicit admission that its first hardware product never found buyers at scale.
The surrounding coverage shows management responding on two fronts: Spiegel is pushing a redesign because Snapchat is 'too hard to use,' while vowing new ways for creators to monetize — both aimed at the engagement and revenue engine that Instagram Stories has been compressing since its launch.
First-order effects
- Investors absorb a second consecutive miss-and-crater cycle: the stock falls hard on weak revenue and user growth, and analysts publicly reverse course, with Mark Mahaney downgrading after admitting he was wrong on the stock.
- Snap's hardware ambitions take a direct hit — writing off $39.9M in unsold Spectacles inventory converts the camera-glasses bet into a recognized loss rather than a pending one.
Second-order effects
- The redesign and creator-monetization pledges become the company's forced response to competitive pressure from Instagram Stories, which copied Snapchat's core format and gave advertisers and users a larger alternative.
- Advertisers gain leverage: with DAU growth repeatedly undershooting expectations across Q2 and Q3, Snap must compete on pricing and ad-product quality against platforms showing steadier audience expansion.
Third-order effects
- The write-off sets a template for how Snap treats speculative bets — hardware gets cut loose when it distracts from the ad business, a discipline the company repeats as losses persist for years afterward, including a $360M net loss as recently as its Q1 2022 report on $1.06B of revenue.
- The Q3-to-Q4 sequence also shows the volatility investors signed up for at the [[a:ipo|IPO]]: just three months later Snap posted 72% revenue growth and a 30%+ stock pop in its Q4 2017 report, meaning neither the bears nor bulls had a durable read on the business.
The trend: Consumer social platforms are learning that hardware side-bets and unproven formats cannot substitute for core ad-business scale, forcing Snap into successive product overhauls under sustained Instagram Stories pressure.