Snapchat’s dancing hot dog was the star of its second quarter earnings call Thursday. The animated character, which you can bring to life with your phone’s camera while using the app, was deemed the “world’s first augmented reality superstar” by Snap Inc. CEO Evan Spiegel in a call with analysts, where he also noted the hot dog has been viewed an astounding 1.5 billion times inside Snapchat.
For Snap, that was pretty much the end of the good news.
The rest of the report was fairly miserable. The company missed analyst revenue expectations, turning in $181.7 million vs. an expected $186.2 million. It missed on earning per share too, losing 16 cents vs. an expected loss of 14 cents. And it missed on user growth, reaching 173 million daily active users vs. an expected 175 million. After the call, its stock promptly dropped more than 16%.
Most notably, Snap’s user growth has slowed. As this tweet from Bloomberg’s Alex Barinka makes clear, Snap isn’t adding users at anywhere close to the same rate it was a year ago.
This slowing growth is a major problem for Snap as it takes on Facebook, a behemoth with 1.32 billion daily active users that dwarf Snap’s 173 million. Facebook has ruthlesslycloned Snap’s features over the course of the past year, which has coincided with the user growth slowdown. Instagram Stories, essentially a Snapchat clone, already has more than 250 million daily users.
In a move meant to reassure investors, Spiegel did say he and co-founder Bobby Murphy wouldn’t sell any Snap stock for the rest of the year. And Snap also released a new number stating that users under 25 spent more than 40 minutes daily inside the app, exceeding the 32 minutes a day users under 25 spend on Instagram. But these positive notes did little to salvage the day.