Snap’s quarterly sales miss Wall Street estimates and its stock plunges

Snap Inc. reported quarterly sales that missed Wall Street estimates, sending the stock down about 12% in extended trading.

The company said fourth-quarter sales totaled $560.9 million, below analysts’ average projections of $562.9 million. Snap’s first-quarter forecast also came in slightly below expectations.

The owner of the Snapchat app last year executed a turnaround after a much-criticized redesign, a host of executive departures and job cuts, and a rocky 2017 initial public offering. The stock is up about 16% this year and closed at $18.98 in New York earlier on Tuesday. The company still isn’t profitable.

“We are working hard to scale our revenue so that we are able to self-fund our investments in the future,” Chief Executive Evan Spiegel said in prepared remarks to investors.

Snap operates in a crowded online advertising market, where Google and Facebook Inc. capture the bulk of sales. Still, Spiegel argues Snap has an opportunity to sell advertisers access to a younger audience.

The company added more users than expected in the fourth quarter, as people downloaded a better Android version of the photo-chat app.

The company said on Tuesday that it had 218 million daily active users in the quarter, beating the 214.2 million average analyst estimate. Besides the Android improvements, the company has been drawing more users in with creative photo tools, such as filters that manipulate the age of your face on a sliding scale.

Snap forecast first-quarter revenue between $450 million and $470 million. Wall Street was looking for $463 million, according to data compiled by Bloomberg.