Snapchat stock pops despite drop of 3 million users

Snapchat's daily user count slips to 188 million

Snap lost about 1 million users in each of its three geographic reporting regions: North America, Europe and rest of world.

Revenue aside, Snapchat's daily active user base declined for the first time. It also recorded a narrower loss per share than analysts expected.

On Tuesday the messaging app's parent company, Snap Inc., reported its Q2 2018 earnings, and it included its first-ever decline in daily active users following a highly controversial decline.

Despite this miss, the stock is now rallying in after-hours trading.

Snap blamed the decline on the "disruption" caused by its redesign. "We are learning a lot as we continue to iterate based on customer feedback", Spiegel said about the smart glasses.

He said the company believes it has addressed users' biggest frustrations.

There was a small silver lining, too.

Average revenue per user (ARPU) increased 34 percent from the second quarter of 2017.

Shares in Snap were flat in after-hours trading following volatility that saw them fall briefly before surging more than 12 percent.

Snap also has been redesigning its app to encourage users to interact with more of its ad-supported videos. According to Spiegel, new Snapchat users are primarily using Android, and it's been trying to completely rewrite its Android app for over a year now.

Snapchat responded with a few design tweaks to appease users, such as making it easier to find Stories.

The beginning of the end for Snap was when Instagram copied their Stories feature in 2016.

"Snap has a major app redesign in process which remains one of the linchpins for future success and monetization, although it has encountered clear speed bumps on this front", said Daniel Ives, chief strategy officer at GBH Insights. Facebook suffered the single biggest wipeout in stock market history following its earnings report.

But it posted otherwise unusually strong numbers - as well as a $250 million investment from a Saudi prince - that sent its stock soaring as much as 13%, before it came crashing down and bouncing all over the place again following renewed concerns around daily user numbers going forward.

Saudi Arabia's Prince Alwaleed bin Talal, a well-known tech investor, announced on Tuesday that he had invested $250 million into the company, in return for a 2.3% stake.

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