This awkward exchange between analysts and Snap CEO Evan Spiegel explains Wall Street's frustration with the stock

Key Points
  • Wall Street analysts pressed for more details on Snap's push notification policy and got a snappy response from the Snap CEO.
  • "Yeah, so I think there are plenty of examples online [laughs] if you want to go for a Google," Spiegel said.
  • "I didn't even understand his response," an analyst said loudly, seemingly unaware his phone was unmuted.
Analyst caught in hot mic moment on Snap earnings call

Disappearing photos are not the only snaps coming from Snapchat co-founder Evan Spiegel.

Wall Street analysts pressed for more details on Snap's push notification policy and got a snappy response from the Snap CEO during Thursday night's earnings conference call. The conversation was not helped by an inadvertently unmuted phone line where an analyst seemed incredulous at Spiegel's response.

Evan Spiegel, co-founder and CEO of Snapchat
Getty Images

Here's the exchange: 

Rich Greenfield, analyst at BTIG:

"I've got two questions for Evan. Evan, on your first investor call and actually Imran [Khan, Snap chief strategy officer] just mentioned it earlier as well, you have both spoken about how others use growth hacking to inflate [daily active users] and how it really hurts .... the platform's relationship with users. Yet we definitely, over the past quarter, begun to see push notifications from Snapchat, essentially alerting us to: 'One of our friends or one of our connections has published a story, would you like to go see it?'

Wondering despite Imran's comment earlier, has your philosophy on growth begun to change? And then two, time spent on Snapchat and Instagram based on the recent comments from Instagram seems like it's fairly similar. But there's a very — my sense is there's very little direct messaging that happens on Instagram, implying that most of their time spent is actually content consumption. When you think about Snapchat's 30 minutes of usage per day, how much of that is actually Stories, including Discover, versus basically communications? Thanks."


"Yeah. So on the first question; we've been sending notifications like that for Stories for friends since 2014, so I'm not sure why you're just seeing that now. On the 'time spent' stuff, I think time spent is definitely interesting metric because unlike daily active[users], time spent is zero sum.

So for us, in Q2, we saw over 40 minutes spent per day for users under 25, and over 20 minutes per day for users over 25. So I think that's some strong growth for us on the time spent side.

We don't break out Stories versus communication, but I think the important thing is we've done a very good job innovating around monetizing communication. I think historically, that's been challenging for folks. So, you know, we're really excited about the way we've monetized communication with our creative tools."


"So maybe just to be clear: What exactly is the 'growth hacking' that others do? If you sending push notifications is not 'growth hacking,' what are others doing that you consider to be growth hacking and not real DAU growth?"


"Yeah, so I think there are plenty of examples online [laughs] if you want to go for a Google. But I think the most important thing for us is that when we're telling you about content on a service that is really highly relevant to you and from your very close friends. And I think people, as they become more reliant on push notifications to sort of relax the standards there, and I think it's important for our business."


"Thank you."


"Our next question is from Mark Mahaney with RBC ..."

Brandon Ross, BTIG analyst (loudly on hot mic):

"I didn't even understand his response!"

Source: FactSet and CNBC recording from Snap investor relations

The conversation came after Snap's fell short of analyst expectations, with revenue and user growth disappointing for the second consecutive quarter. The newly public social media company has faced aggressive tit-for-tat competition with the likes of Facebook and Alphabet's Google, which are moving into Snap's territory of ephemeral messaging and augmented reality, and short, instant media clips, respectively.

Shares of Snap were under pressure during the call, dropping double digits.

While the exchange was certainly one of the more heated during the quarterly call, there were several instances where analysts asked for more guidance on new products like Snap Maps or advertising tools, only to be met with vague responses that it was still "early days."

The disconnect between Snap and Wall Street made it into Friday's analyst coverage.

"Snap's unwillingness to provide Street guidance will continue to be a disservice to shareholders as estimates continue to fluctuate wildly and it introduces unneeded uncertainty into results," Jefferies analyst Brian Fitzgerald wrote in a note.

The disjunction between Snap and Wall Street comes in spite of Snap's so-called secret weapon, Khan, a former star analyst and investment banker. The finance veteran helped lead Alibaba's massive IPO — subject to its own skepticism from investors at the time— and was one of the first analysts to become an authoritative commentator on internet media businesses like Facebook.

Snap, like many competitive tech start-ups, has been secretive about its products and operations. But some commentators perceived Spiegel's response as arrogant.

Tweet: Definitely the best thing for CEOs to do when shares are falling 17% is to sound annoyed that people don't "understand" his company.

Tweet: Same arrogant approach to IR out of $SNAP as last Q. No commentary in the letter, and prob no media calls either.

Snap didn't immediately respond to a request for comment.

Greenfield said in response to a request for comment from CNBC that "The hot mic comment was certainly not intended to be heard on the call as they had already introduced next company.

"However, based on investor feedback, it is abundantly clear that nobody understands what is and is not growth hacking as it relates to push notifications that have a direct impact on driving daily active users. Evan Spiegel labeling other's actions 'growth hacking' distinct from what Snapchat is doing needs to be clarified and is a critical issue for investors."

After the call BTIG analysts tweeted out a light-hearted response using Snap's Bitmoji technology:

Tweet: Conference calls are better with @brandonBTIG

— CNBC's Michael Sheetz contributed to this report

Disclosure: CNBC parent NBCUniversal is an investor in Snap.

Disclosure: BTIG expects to receive or intends to receive compensation for investment banking services from Snap in the next three months, and has received investment banking compensation from Snap in the last 12 months. BTIG co-managed Snap's IPO this year.

Update: Transcript has been edited for clarity.