Shares of the Snapchat company are down by a fifth

The stock exchange has severely punished the makers of the photo app Snapchat for the first drop in turnover. The share lost almost a fifth of its value in one fell swoop.

Operating company Snap’s revenue fell 7 percent to $988.6 million in the last quarter. Snap had announced the drop three months ago. Previously, the service was known for its explosive growth.

The number of daily active Snapchat users rose from 375 to 383 million within three months. Its quarterly loss, meanwhile, improved to $328.7 million from $359.6 million a year earlier, Snap said after the U.S. market closed Thursday. After the figures were presented, the stock temporarily lost 20 percent and aftermarket trading ended with 18.29 percent.

Online advertising is weakening

Snapchat originally originated from photos disappearing on their own. Meanwhile, however, the company relies on the combination of digital effects with the real world on a grand scale. The digital fittings business has become more important to Snap as online advertising, which has been its mainstay until now, is weakening.

The company recently presented a digital mirror, which also wants to be sold in physical stores. The company is currently experimenting with an artificial intelligence-based chatbot in the app.

Snap is being hit by the general slowdown in the online advertising market, which is also being felt by top dogs Google and Facebook.

But there are also other problems. After Apple’s moves to increase privacy on the iPhone upended many previous ad models, Snap has established new processes that are not yet running smoothly. On the iPhone, app providers like Snap must explicitly ask users for permission if they want to track their behavior across different apps and services for advertising purposes. Many refuse.

In the conference call after the presentation of the figures, an analyst directly asked management whether it would not be better to scale back investments in so-called augmented reality (AR), such as digital fittings, until Snap had more money. Investor confidence in Snap is at stake, he warned. Co-founder and boss Evan Spiegel was then convinced that the advertising business would pick up again. (sda/dpa)