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Snapchat growth stalls in first earnings report

19 May, 2017, 23:21 | Author: Paula Vaughn
  • Evan Spiegel

However, revenues were slightly higher than Street expectations at $149.6 million.

It's bad, but not unprecedented, reports the Los Angeles Times, noting Facebook stock fell 10% and Twitter stock fell 22% following the first quarterly earnings report after an IPO.

Snap said that the net loss, presented as GAAP figures, includes $2.0 billion in stock-based compensation expense in the form of RSUs (Restricted Stock Units).

Snap Inc reported a rise in daily active users to 166 million, up 36% from 122 million a year earlier, but not a huge increase since the IPO, and well below the 200 million users of Instagram Stories.

That's almost a decade younger than the average age of retail clients trading Snap that day, TD said. The number of people using Snapchat every day increased by 36pc year on year to 166m, down from 47pc growth in the previous quarter. Snapchat grew just 7 percent in Q3 2016 and 3.2 percent in Q4.

On Snap's Q1 earnings call Wednesday, Spiegel was asked bluntly: "Does Facebook scare you?"

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Snapchat has faced stiff competition from companies such as Facebook, WhatsApp and Instagram. For example, JPMorgan Chase expected the daily active users to reach 169 million. Its user numbers also came in light. Facebook, for example, has been snapping up features present in Snapchat and incorporating them into its own products. Advertisers typically flock towards a slightly older demographic that has the money to spend, and Snapchat's audience isn't that ideal for such a move.

A Snapchat sign hangs on the facade of the New York Stock Exchange (NYSE) in New York City, on January 23, 2017.

Co-founder and chief executive Evan Spiegel told a conference call the company has been working on performance improvements and promoting its Android application, which could offer more growth globally compared with the Apple iOS system.

The slowing rate of growth is not surprising for the USA market, given Snapchat's huge popularity among its core group of young users. eMarketer estimates that 84.4% of 12- to 17-year-olds, and 78.6% of 18- to 24-year-olds, use the app at least once per month.

"We believe that everyone is going to develop a camera strategy", Spiegel continued, before dropping what can only be described as an epic burn.

Snap (SNAP) shares plunged 21 percent in after-hours trading after the social media company's debut earnings report as a public company left investors unimpressed.

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