Snap's Second Quarter 2017 Results Reveal Snapchat Struggling To Get New Users

Snap Inc. has published its second quarter 2017 results, and it looks like the company is struggling to get new users for Snapchat. The company reported that it’s daily active users only grew by 4 percent, with an estimated revenue of only $181.7 million.

The 4 percent increase in Snapchat’s daily active user base only represents around 7 million new users. This is one percent lower than the first quarter’s estimated increase of 8 million users. This is also 2 million short of analysts’ estimate of 10 million daily active users for the second quarter. Snapchat’s total number of daily active users (DAU) now is 173 million, according to Engadget.

By comparison, Snapchat’s number of DAU is lagging behind Instagram Stories, which reached 250 million users this past June. The slowing down of DAU growth is speculated to be the result of Facebook and Instagram copying Snapchat’s main features.

READ: Facebook Shuts Down Lifestage, Its Snapchat-Like App For High Schoolers​

The results may be a disappointment to investors considering that Snap has been adding several new features to Snapchat in the recent months. Snapchat recently added new lenses, custom Stories and the location-based Snap Map feature. Snap also invested in getting original shows from several of its partners, and who could forget the popularity of Snapchat’s dancing hot dog, which the company says has been viewed 1.5 billion times in the Snapchat app.

Snap’s revenue also took a hit during the second quarter of 2017. The company may have had a revenue of $181.7 million, but this is far from it’s expected goal of $189 million. Overall, the company reported a loss of $193 million after taxes.

Although Snap’s second quarter results may seem grim, there’s at least one good news. The company was able to grow its average revenue per user for the quarter to $1.05 from $0.50 from last year, which is an increase of 109 percent, according to Business Insider. Snap executives believe that it could continue to grow its business by making more money from existing users, rather than simply increasing its number of new users.

Snap’s shares went down by 17 percent during after-hours trading. This has brought up questions on whether or not Snap CEO Evan Spiegel and co-founder Bobby Murphy would sell shares of the company.

READ: Evan Spiegel Net Worth After Snapchat Stock Continues To Fall​

“Given the amount of speculation around the lock-up expiration, I feel it is important to note that Bobby and I will not sell any of our shares this year," Spiegel said on a call with analysts, according to Reuters. “We believe deeply in the long-term success of Snap.”

Investors are now worrying on how Snap will be able to get new users and more advertising profit when the industry is already being dominated by the likes of Facebook and Google. Snap needs to find a way to successfully monetize its Snapchat audience.

Snap is already trying to do just that by creating original content. “Phone Swap,” the company’s first Snapchat original series, was able to get more than 10 million viewers per episode. “Phone Swap” is also headed to TV, but no information was given yet on when it will finally air on television. Snapchat’s Discover feature also saw a 30 percent growth in viewership during the quarter, and this should bode well for Snap’s content creators/partners.