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Can Snap Regain Investor Confidence?

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Dec. 20 2018, Updated 7:31 a.m. ET

New hire likely to join next year

Snap (SNAP) has announced it’s bringing a new communications chief on board. Julie Henderson, currently chief communications officer at 21st Century Fox (FOX), will move to Snap in the same role. Henderson is expected to make the transition to Snap as soon as Fox completes the sale of most of its operations to Walt Disney (DIS). That transaction, valued at $71.3 billion, is expected to close in the first half of 2019.

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At Snap, Henderson will take over from Mary Ritti, who is departing after six years with the company. Henderson is poised to join Snap at a time when the company is struggling with a number of challenges that have greatly shaken investor confidence in the stock. Trading at $5.91 per share as of December 12, Snap stock is down nearly 60% since the beginning of the year and down more than 70% from its 52-week high.

Sinking subscriber base and lawsuit

A confluence of factors has led Snap to this low. One of them is a loss of subscribers. Snap’s Snapchat service shed 2.0 million daily active users in the third quarter, adding to the loss of 3.0 million daily users in the second quarter. Snapchat exited the third quarter with 186 million daily users, compared to Facebook’s (FB) 1.5 billion daily users. Twitter (TWTR) said its daily users increased 9.0% year-over-year without disclosing the exact number.

The other issue that seems to have kept investors on edge about Snap is the class action lawsuit the company is facing from some of its shareholders in a matter related to its initial public offering disclosures.

Snap taps communications veteran

Henderson is a corporate communications veteran. She joined Fox in 2006 when the company was still part of News Corp.

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