What happened

Shares of Snap Inc. (NYSE:SNAP) tumbled 10.1% in November, according to data from S&P Global Market Intelligence, after the company reported disappointing earnings in the third quarter and took a writedown for unsold Spectacles inventory. 

So what

Snap managed to increase its top line by 62% in the third quarter, to nearly $208 million and grew its daily active users to 178 million, up 17% from the year-ago quarter. But the company saw its net losses widen to $443 million, a further drop from a loss of $124 million in the third quarter of 2016. Analysts were expecting Snap to lose $0.33 per share, but Snap's earnings came in a bit lower at a loss of $0.36. 

Yellow box with the word Snap Inc. written in it.

Image source: Snap Inc.

Investors were are also disappointed that the company wrote down $39.9 million in charges related to Snap's camera-enabled sunglasses, called Spectacles. The charges came mostly from excess inventory and cancellations of purchase commitments. 

Snap CFO Drew Vollero, said on the company's earnings call, "Unfortunately, we misjudged strong early demand for Spectacles and purchased more inventory than we now anticipate being able to sell."

Now what

Snap doesn't offer any forward guidance, but CEO Evan Spiegel said on the analysts' conference call that Snap has three main areas it wants to focus on in 2018: user growth, content, and augmented reality.

That first one is clearly the most important, as Snap's user growth was unimpressive in the third quarter, particularly for such a young company. Spiegel noted, "This quarter, we grew our daily active users at a lower rate than we would have liked, adding 4.5 million new users."

In short, investors weren't happy with the company's losses or its writedown for Spectacles, and Snap's user growth isn't where it should be. The company's shares are down 34% since it went public earlier this year, and the third-quarter results showed that Snap still has a long way to go before it looks like a solid long-term investment.