It Sounds Like Snap's Spectacles Blunder Was Even Bigger Than We Thought
"Excess" camera sunglasses have cost Snapchat's parent company Snap $39.9 million in the last three months. The news is not a great look for Snap, which-according to the Information-had "hundreds of thousands" Spectacles piling up in warehouses as of last month. We knew about the inventory; now we get to hear about the cancelled orders for more.
Snap disclosed the nearly $40 million in costs "related to Spectacles inventory" inside its latest earnings report today. Those costs include "excess inventory reserves and inventory purchase commitment cancellation charges." That is: Money related to storing the sunglasses and cancelling orders from suppliers after an initial wave of excitement. Clearly, Snap is selling fewer Spectacles than it anticipated.
Hardware is hard.
$39.9 million is but a drop in the bucket for Snap. In total, the company says it lost more than $443 million last quarter. This loss would not look so bad (at least to investors) if the company managed to rake in more ad money than usual last quarter. It did not.