Snap shares took a nosedive after the bell Tuesday after reporting second quarter earnings. The company reported an adjusted loss of 9 cents per share, meeting estimates. Revenue of $454.16 million surpassed FactSet estimates of $442 million.
“I am proud of our team for innovating on new experiences for our community and driving value for our partners, demonstrating the importance of our service in people's lives. We are grateful that the resilience of our business has allowed us to remain focused on our future growth and opportunity,” Snap CEO Evan Spiegel said in the earnings release.
So why the over 10% after hours plunge in the stock? It all came down to the daily active users. The 238 million DAUs Snap reported in the quarter came in slightly below the expected 238.5 million, though the result marked a 17% year-over-year increase.
Going forward, Snap expects to continue to invest in its Discover platform which saw users watching shows increase over 45% year over year. Further investments in its camera and augmented reality are also expected.
Were expectations simply too high? Snap stock has gained around 29% year to date on improving trends and consumer offerings. In the prior quarter, Snap announced DAUs had increased to 229 million, which marked a monumental 20% increase at the time.
Jim Cramer said there's more to it than that. Snap took a hit to advertising because it's "traditional advertisers didn't come in," Cramer said, adding that that may very well because of a lack of events to advertise.
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