Following less than stellar Q3 2017 earnings report, Snap Inc. has some more bad news, following pretty abysmal past several months. Q3 earnings didn’t sit well with Wall Street and neither will this news of unsold spectacles units.
The news of Q3 earnings for Snap sent the stock plummeting nearly 20 percent. There was some tiny bits of news that was included in the report. The company’s hardware product, Spectacles, the camera-equipped sunglasses it sells both online and in vending machines around the world, has posted some big losses for Snap Inc. Snap says that it lost nearly $40 million on the device, “primarily related to excess inventory reserves and inventory purchase commitment cancellation charges.”
There’s another way of saying it: Snap over-estimated the demand for Spectacles and customers simply didn’t and aren’t buying as many units the company had hoped it would sell. Many customers ended up returning the Spectacles they bought, confirming the October report from The Information that Snapchat was stuck with hundreds of thousands of unsold spectacles, after selling only 1150,000 units, confirmed by CEO Evan Spiegel.
Despite having a great marketing campaign for the Spectacles, the company failed to attract a lot of attention to the hardware. Many customers that originally bought them returned the units for a refund. The company’s strategy to have “Snapbot” vending machines didn’t work either. Google Glass did fail pretty bad, and Spectacles aren’t on the same level, mind you. But the hardware by Snap did fail. CEO Evan Spiegel admits to the mistakes it made with the Spectacles project and says that the company has learned a lot from the experience. Snap Inc. even went through a phase of shuffling its hardware team to create some spark. Maybe we will see something better in the future?