Snap's stock price dropped 20 percent on Tuesday, after its flagship app's user growth failed to meet analysts forecasts by more than 4 million users.
Snap also reported a net loss of $443.2 million.
Close to $40 million of the losses can be attributed to lower than forecasted sales of Spectacles, its over-hyped and underperforming sunglasses. "Because we were so excited, we made I guess the wrong decision," said CEO Evan Spiegel during the company's 3Q investor's call.
However, the bulk of the lost revenue and disappointing growth numbers can be blamed on the messaging app's failure to add older generations into its user base, like many experts expected them to by now.
Spiegel has vowed to finally redesign the app, with the goal of making it more user-friendly to broaden appeal. The top complaint from mainstream users has been that the app is too hard to use compared with similar messaging apps and social networks.
Will the tech firm finally listen to user feedback this time? (Only time will tell).
Until then, look for growth to remain stagnant.
While Snapchat remains popular with Generation Z, increased competition from competitors like Instagram and Facebook have left them unable to innovate this year.
Many marketers have noticed decreased user engagement on content and lower open rates leading to disappointing ROI from placing ads.
If you're a marketer considering how to spend your ad budget in Q4, I recommend taking a wait and see approach with Snapchat. Not even its CEO seems certain about how users will react to its new app.
"There is a strong likelihood that the redesign of our application will be disruptive to our business in the short term, and we don't yet know how the behavior of our community will change when they begin to use our updated application," Spiegel added.