You have to feel bad for those investors who thought they found another Facebook in Snapchat.
When the social media company filed its initial public offering (IPO) a couple of years ago, shares soared to around $28, leaving many to speculate that this stock had legs.
Hardly.
At the time of this writing, Snap shares are trading at $5.64 after cratering nearly 14 percent on Wednesday on news that Chief Financial Officer Tim Stone was leaving the company. He was with Snapchat for only eight months after working for Amazon for 20 years.
From the Associated Press:
The company behind Snapchat is losing its second financial chief in less than a year as the social media service confronts a declining user base and stiff competition from bigger rivals.
Snap Inc. said Chief Financial Officer Tim Stone is leaving to pursue unspecified opportunities. He had joined Snap just eight months ago after two decades at Amazon.
A number of top executives have left Snap in recent months. Stone had been broadly seen as someone who might bring more stability to Snap’s executive ranks. As such, his departure sent shares (SNAP) tumbling 13 percent Wednesday.
The executive exodus “underscores a spate of challenges the company has faced as it squares off against Instagram and addresses ongoing challenges related to its app redesign,” Cowen analyst John Blackledge said.
Snapchat is in the red, it has never turned a profit, and the company doesn’t expect to see black ink for another couple of years – if ever.
But people were allured by the prospect of a disappearing photo and video messaging application. They thought this was going to be the level of Facebook or even Twitter.
Leave a Comment