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SNAP -1.91%

executive is leaving a month after the company reported its first quarterly decline in daily users, reviving Wall Street’s concerns about social-media sites’ growth prospects and handing the company a significant challenge as it struggles to boost its share of the advertising pie.

Imran Khan, Snap’s chief strategy officer, becomes the latest senior member of Chief Executive Evan Spiegel’s circle to exit. His departure comes as Snap is moving to reverse a poorly received redesign of its flagship Snapchat app. The initiative was aimed at separating user content from that of big media companies, but a backlash from users is hampering Snap’s bid to convince advertisers to spend more dollars on the platform.

A string of executives in finance, sales and product have left Snap recently, and Mr. Khan’s exit leaves the company without a clear link to Wall Street at a time when its stock—like that of its bigger rivals




—is under pressure.

Snap’s shares surged 44% on their first day of trading in March 2017, but weak earnings in the subsequent year damped investor enthusiasm. The shares are down more than 40% from their $17 initial public offering price, trading Monday down 1.9% at $9.74—a record closing low.

“When you can’t distinguish yourself operationally or financially, it’s no surprise that people can get discouraged,” said Fredric Russell, who runs the Fredric E. Russell Investment Management Co. and opted not to invest in Snap’s IPO.

While Snap reported revenue up 44% and a narrower loss in its most recent quarter, the company has yet to report a profit since it went public and has failed to live up to Wall Street’s Facebook-sized expectations.

Mr. Khan is leaving to create a Los Angeles-based investment company, and informed Mr. Spiegel last week of his plans, a person familiar with the matter said. Snap in a filing Monday said Mr. Khan’s departure isn’t tied to accounting, management, policy or similar issues, and that he is helping with the transition. His last day hasn’t been determined.

Mr. Khan, who joined Snap in 2015, was brought on to help Mr. Spiegel turn the company’s popular free app into a moneymaker and eventually guide Snap through an initial public offering. He transitioned the company to selling ads primarily through online tools rather than sales teams.

Snap’s reported drop in daily users came on the heels of similar signs of slowing growth at Facebook and Twitter. Facebook’s late July alarm bell on slowing growth—not just in overall trends but in its most lucrative markets of the U.S. and Canada—sent its stock careening down 20% in late July. Twitter’s fell 20% as well.

The three firms face specific challenges, but the trio of bad reports furthered questions of whether efforts to extract more revenue from people were taking a toll on user growth. Social-media stocks took another round of hits last week after executives from Facebook and Twitter testified before Congress about efforts to address bad actors on their platforms.

For Snap, the loss of Mr. Khan puts it in an even tougher position, particularly in convincing advertisers to spend more money on Snapchat after the drop in daily users and the negative perceptions about the redesigned app, said Victor Anthony, senior internet analyst at Aegis Capital Corp.

Snap initially sold ads to select companies. Mr. Khan helped Snap build a programmatic way to sell ads, similar to the platforms that power Facebook and


Google. Snap pitched itself as an alternative to the “advertising duopoly” of those companies.

Mr. Khan acted as Snap’s explainer, advocate and salesman to those outside the company, especially Wall Street and advertisers, Mr. Anthony said. “Imran was the public face of Snap,” he said. “It’s a loss.”

Before joining Snap, Mr. Khan was head of internet banking at Credit Suisse Group AG, where he helped the bank land a key role in the largest IPO ever—

Alibaba Group Holding

Before that, he had covered internet companies as an analyst at JPMorgan Chase & Co.

He is among a number of prominent Wall Street executives Silicon Valley poached in recent years, to mixed results. Twitter lured Anthony Noto from

Goldman Sachs Group

to be its finance chief and Airbnb Inc. convinced

Blackstone Group

LP CFO Laurence Tosi to take the same post at the home-sharing company. Ruth Porat traded a CFO position at

Morgan Stanley

for one at Google.

Inc. last month named Wall Street veteran Nelson Chai, who is well-versed in the IPO process and held the top finance job at Merrill Lynch & Co., to help lead it to a public offering expected late next year.

Messrs. Noto and Tosi both left their companies earlier this year; Mr. Noto runs the online lender Social Finance Inc. while Mr. Tosi has since started an investment fund. Ms. Porat remains at Alphabet.

In an email to Snap employees viewed by The Wall Street Journal, Mr. Khan said he had achieved what he had hoped to accomplish since joining the company almost four years ago, including scaling up an ad system and increasing revenue to a $1 billion annualized run rate. His email said in the email he has always wanted to build his own business and now is the right time.

Write to Georgia Wells at Georgia.Wells@wsj.com and Maureen Farrell at maureen.farrell@wsj.com

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