Snap shares ended lower in the US Tuesday, after an analyst said that Snapchat’s parent company was “running out of money”. The comment followed a few days after a leaked memo from Snap CEO Evan Spiegel, set becoming profitable in 2019, as one of its key goals.
Snap shares closed 6.42% lower at $7.00, in the US Tuesday. However, the stock is currently over 1% in the green, pre-market.
Snap’s outlook takes a hit
MoffettNathanson analyst, Michael Nathanson, Tuesday cut his revenue estimates by 7% for 2019 and 15% for 2020 for Snap and warned over a pressing financial problem for the business.
“While it is obvious that Snap wasn't prepared for life as a public company, it now has a more pressing problem. It is quickly running out of money,” Nathanson wrote in a research note to clients.
The note and earnings forecast reductions, followed news the previous week, that CEO Spiegel had sent a long missive to his staff, stating the tech firm had made mistakes and needed to target profitability as a key goal for 2019.
“In our excitement to innovate and bring many new products into the world, we have lost the core of what made Snapchat the fastest way to communicate,” Spiegel wrote in the leaked staff memo.
Aside from concerns over Snap’s profitability and cash burn, the social media business announced Wednesday, the introduction of Snap Originals. New exclusive shows, to be shown on Snap, with new episodes airing every day.
There will be 12 new shows for users to watch each day, including:
- Comedy ‘Co-Ed’.
- Mystery thriller, ‘Class of Lies’.
- Docuseries ‘Endless Summer’.
“Snap Originals will also feature new Show Portals, letting you swipe up and step inside a scene from a Show to experience it for yourself,” the company said. “Snap Originals will also have Lenses, Filters, and other fun ways for you to share the show experience with your friends.”