Snap Declines After Daily User Growth Falls Short of Estimates

(Bloomberg) -- Snap Inc. fell after the company reported third-quarter ad revenue and user growth that missed estimates, with Chief Executive Officer Evan Spiegel acknowledging that "advertising revenue growth remains below our ambitions."

The company had 495 million daily active users through the period ending in September, compared with 493 million the prior quarter. User numbers missed analysts' expectations of 499 million.

Third-quarter revenue and a current-quarter forecast were in line with analyst expectations.

Revenue increased 14% to $1.72 billion in the quarter ended Sept. 30, the company said Wednesday, aligned with the average of estimates compiled by Bloomberg. Snap, which owns the Snapchat messaging app, projected fourth-quarter sales for an average of $1.97 billion, slightly exceeding analysts' projections for $1.96 billion, according to data compiled by Bloomberg.

Shares of the Santa Monica, California-based company dropped more than 11% in aftermarket trading. The stock had been down 27% so far this year heading into Wednesday's report.

Spiegel said he is working to build Snap's advertising business after making performance improvements for "more durable growth" in the future, according to his prepared remarks for investors. He is also betting big on the company's AI-powered glasses, called Specs, unveiled in June. The company has been taking orders for the $2,195 gadgets and said it plans to begin shipments later this year.

Snap faces a challenging regulatory and legal environment, with countries considering social media bans for teens and users filing lawsuits alleging the companies behind these platforms have knowingly hooked and harmed minors with their products. "While outcomes remain uncertain, they may result in significant changes to our products and business practices," the company said.