Snap stock is down big after reporting less revenue — and fewer users — than Wall Street expected

Snap has disappointed Wall Street. Again.

The media and messaging company reported Q3 earnings on Tuesday, and the numbers were well below the modest expectations analysts had set.

Snap reported revenue of about $208 million, roughly 12 percent less than the $237 million analysts were hoping for. Snap also reported a net loss of $443 million on the quarter.

Snapchat also reported disappointing user growth. The company added just 4.5 million new daily users; analysts were expecting closer to eight million new users. It now has 178 million total daily users.

Snap stock was down more than 18 percent in early after-hours trading.

It’s the third straight disappointing quarter for Snap, which hasn’t been able to get its business or user base growing as fast as many expected when it completed a high-profile IPO in March. Some Snap investors and insiders thought that Snap would be a $1 billion business in 2017, and some outsiders agreed. Goodwater Capital, for example, pegged Snap’s 2017 revenue at $1.1. billion back in February.

Through the first nine months of the year, Snap has brought in just $539 million in revenue.

It’s not entirely clear why the company’s business hasn’t lived up to early expectations, though the general consensus is that Snap’s transition to automated advertising sales — where advertisers can buy ads through software programs — is just taking longer than expected to ramp up.

In Snap’s prepared remarks for its Tuesday earnings call, the company admitted as much. Snap claims that it has five times as many advertisers buying ads through its automated auction, which sells ad inventory to the highest bidder, than it did at the beginning of the year.

But it also claims that selling via the auction versus selling directly to an advertiser through a human sales team has also “dramatically reduced pricing,” CEO Evan Spiegel wrote. “Our auction has a lower price-point than our reserved business because there is no fixed rate card,” Spiegel continued.

Simply put: Advertisers can get the same ads for cheaper when buying through the auction than if they bought them via Snap’s sales team. Spiegel says this is just temporary. “As we onboard more advertisers and multiple advertisers compete for the same ad impression, we should see higher pricing,” he wrote.

Average revenue per user rose 39 percent to $1.17.

Snap also cautioned on its last earnings call that Q3 revenue in particular might be smaller than expected because the company wouldn’t have major world events like the Olympics and a U.S. presidential election to help boost spending like it did in 2016.

Spiegel and other Snap execs will take questions from investors during an earnings call at 5 pm ET Tuesday. We will update here or at Recode with anything interesting.

Update: More bad news from the company’s call: Snap says it “misjudged” the popularity of its video-recording sunglasses, called Spectacles, and says it’s adding a one-time, $40 million expense to its balance sheet because of “excess inventory and purchase commitment cancellations,” which means Snap thought it had $40 million worth of glasses, but now it doesn’t.

“Ultimately we made the wrong decision,” Spiegel said. “We’re learning from it.”

Spiegel also announced that Snap is redesigning its app in the hopes of making it easier to use for a broader subset of people.

“There is a strong likelihood that the redesign of our application will be disruptive to our business in the short term, and we don’t yet know how the behavior of our community will change when they begin to use our updated application,” he added.

This article originally appeared on Recode.net.