Aw Snap: Snapchat parent company’s value plummets after earnings report

Snap Incs shares lose nearly a quarter of their value on news of $2.2bn loss and slowing growth in first quarter report, its first since its IPO in March

Snapchats parent company Snap Inc lost nearly a quarter of its value on Wednesday when its newly listed shares went into a nosedive after the company reported a $2.2bn loss and slowing growth.

Snaps shares closed the day at $22.98 and fell close to 25% in after hours trading.

This was the first time Snap has had to publish its earnings since it made its initial public offering (IPO) in March, which valued the company at $28bn. Since then, the company has been trying to convince Wall Street that it can make money from advertising at a time when rival Facebook has been pushing aggressively into Snaps territory.

Snap reported 166m daily users at the end of March, up 5% from the previous quarter. The number was below analysts expectations and year-on-year growth also slipped to 36% from 48% in the previous quarter. Snap reported $150m in revenue, versus the $158m expected by Thomson Reuters.

Most of the companys losses went in compensation to Snaps staff after the IPO.

Bloomberg Markets (@markets)

Snap stock plunges after first earnings report

May 10, 2017

Snap CEO Evan Spiegel said in the earnings call that the company refuses to engage in the type of growth hacking used by other companies, including sending lots of push notifications to get users to do something unnatural.

Its an easy way to grow daily actives quickly but we dont think those techniques are sustainable over the long term and it impacts our relationship with customers, he said.

To compensate for the lacklustre user growth, Snap pointed out that more than 3 billion daily snaps were created in order to underscore how actively engaged its user base is.

Facebook, which once made a $3bn bid for Snapchat, has upped the ante by making the camera a central piece of its apps and offering features similar to Snap on its platforms, including Instagram and WhatsApp. The company recently said Instagram Stories alone had reached 200 million daily active users.

Spiegel had a biting response to Facebooks copycat tactics: Just because Yahoo has a search box doesnt make it Google.

Reuters contributed to this report

About the Author

Leave a Comment:

Terms and Conditions | Privacy Policy | Copyright Notice | Anti Spam Policy | Earnings Disclaimer | Health Disclaimers | Terms and Conditions | Privacy Policy