Wedbush's Dan Ives Expresses Investors' Growing Frustration With Snap: 'Every Quarter There Is Another Dog Ate The Homework Excuse'

Despite Snap Inc. (NYSE:SNAP) CEO Evan Spiegel‘s explanations, investors are growing increasingly disillusioned with the company’s financial performance. This is evidenced by the significant drop in Snap’s stock, which has plummeted by 40% this month. The company’s recent financial report revealed a loss of $248 million, coupled with a fresh round of layoffs, marking the second in 18 months.

What Happened: Wedbush CEO Dan Ives expressed that investors are increasingly becoming frustrated with Snap, reported The Times on Sunday.

"Every quarter, there is another ‘dog ate the homework' excuse," said Ives.

"A lot of investors have become so frustrated, they will never touch it again."

According to Benzinga Pro data, Snap closed at $11.17 on Friday, much lower than the $17 IPO price.

Spiegel attributed this underperformance to a sluggish advertising market, a reason that many found unconvincing, especially given that rival Meta Platforms (NASDAQ:META) reported record profits from a 24% increase in ad sales during the same period,

Spiegel, along with his co-founder Bobby Murphy, was granted 96% control of the voting shares in the company when it went public in 2017. This effectively relegated investors to the role of mere spectators. Despite this, the anticipated success under Spiegel’s leadership has not materialized, leading to a mass exodus of disillusioned investors.

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Investment banks like Goldman Sachs initially presented Snap’s IPO as a rare chance to support a visionary leader in the vein of Steve Jobs. However, the company’s consistent underperformance has led to a loss of investor confidence, prompting a sell-off.

Why It Matters: This recent development is in line with the ongoing struggles of tech companies, particularly social media platforms, to meet investor expectations. This is evident in the recent abysmal earnings of Snap and the subsequent drop in stock value.

Adding to the financial woes of Snapchat, New York City is suing the platform along with other major social media platforms over their alleged role in causing mental health issues among young users.

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