Snap lost nearly $40 million on unsold Spectacles

Snap Inc. had a pretty abysmal past few months, reporting today that its fiscal third quarter 2017 earnings came in under Wall Street expectations. The news sent its stock plummeting nearly 20 percent. Packaged in its statement was a tiny nugget of news regarding the company’s Spectacles, the camera-equipped sunglasses it sells both online and in pop-up vending machines around the world. Snap says it lost nearly $40 million on the device, “primarily related to excess inventory reserves and inventory purchase commitment cancellation charges.”

In other words, customers simply didn’t buy as many units as Snap thought they would, while a significant number of customers who did purchase the glasses ended up returning them. This detail confirms an October report from The Information that Snapchat was stuck with hundreds of thousands of unsold Spectacles, after selling just over 150,000 units by CEO Evan Spiegel’s own admission last month.

So despite its viral marketing campaign, which used online countdown clocks to reveal the location of a new uniquely located “Snapbot” vending machine, the product seems to have fallen flat even once retail availability opened to Amazon and other online destinations. It’s not quite a Google Glass-style failure, but Spectacles don’t appear to have helped the tech industry turn the corner on augmented reality or always-on video recording. (Apple, Google, and others are now leading the charge in mobile AR.) Snap is still reportedly working on more fully featured AR glasses, but The Information reported that it’s since scrapped its drone project amid the hardware struggles with Spectacles.