Snap Shares Fall 14% As Investors Weigh String Of Executive Exits, CFO Stepped Off After Asking Board For A Raise — Update

By Dade Hayes, Dawn C. Chmielewski

Snap Inc

UPDATED to reflect new information about the reason for the CFO’s departure

Shares of Snapchat parent Snap Inc. fell 14% today as investors weigh in on the departure of CFO Tim Stone, a former Amazon executive who exited after just eight months on the job.

The company reported the its latest high-level executive departure Tuesday, after the market closed, saying Stone planned to “pursue other opportunities.”

Bloomberg is reporting something else transpired: Stone went around CEO Evan Spiegel to ask Snap’s board directly for a raise, in an incident that heightened tensions between the two and hastened the CFO’s departure.

Stone apparently also had big ambitions, asking to be promoted to chief operating officer, following the departure of Imran Kahn at the end of last year, Bloomberg reported. Spiegel appointed two outsiders instead: Jeremi Gorman as chief business officer and Jared Grusd as chief strategy officer.

The company’s stock closed at $5.64 a share, its lowest level of 2019. It has not yet retreated to the all-time low of $4.82 it established in December amid serious investor concern about the direction of the social media company, whose user growth has stalled.

Several analysts today offered their takes on the Stone news, which Barron’s called the latest in a “conga line” of executive exits in recent months.

Mark Mahaney at RBC Capital Markets, downgraded the stock to “sector perform” from “outperform” and did not mince words in his note to clients.

Our take is that this is not the first c-level departure since Snap’s IPO nearly two years ago… or the second… or the third,” he wrote. Stone’s exit, he noted, follows those of Chief Strategy Officer Imran Kahn, VP Of Content Nick Bell, Head of Communications Mary Ritti and prior CFO Andrew Vollero. “We view it as a material negative that Tim Stone announced his intention to resign less than a year into the role. We had viewed Stone as a key positive management addition, given his successful background at Amazon.”

John Blackledge of Cowen & Co. retained his market perform rating on the stock. “Snap’s recent exodus underscores a spate of challenges the company has faced as it squares off against Instagram and addresses ongoing challenges related to its app redesign, particularly technical issues on Android,” he wrote. In fairness, he added, “Despite the turnover and challenges, our most recent Ad Buyer survey reflects rising buyer adoption of Snap overall.”

Yesterday’s SEC filing disclosing Stone’s departure also contained a more upbeat forecast for quarterly results, which are expected to outdo previous company guidance, observed Brian Wieser of Pivotal Research. He also said the outsized role in the management structure for CEO Evan Spiegel is “a trait common to companies with venture-stage characteristics” and “could be a factor impacting managerial stability.”
The decline of the stock, which has lost half its value in six months, has also affected turnover, Wieser said. “We can guess that many employees were attracted to the company with promises of substantial compensation that would have depended on a much-higher stock price,” he wrote, adding that he would maintain his “hold” rating and 12-month price target for the shares.

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