Shares in Snap plunge after disappointing first quarter results
Shares in Snap, Snapchat’s parent company, have slumped after their first quarterly report delivered some disappointing results for the first three months of 2017.
Snap Inc Quarterly Results
The first set of results to be published since Snap Inc’s stock market flotation showed lower than expected growth. The app’s level of daily active users rising only 5% to 166 million compared with the last three months of 2016.
Although this is 36% higher than user growth during the equivalent period at the beginning of 2016, it is two million below Snap’s growth projections. This news hit stock in Snap hard with share prices haemorrhaging over 20% in value during New York’s after-hours trading.
Snap Inc 5 Minute Share Price Chart
Large Net Losses
The dent led to an adjusted loss of $188.2m, and an eye-watering net loss of $2.2bn. Although this was mostly due to the costs incurred by Snap’s IPO back in March. Particularly the stock option payouts to staff with $750 million alone going to CEO Evan Spiegel.
Snap’s revenue increased by 286% for this quarter to nearly $150m, but this result was also short of forecasts missing targets by about $9m.
Snap’s chief executive Evan Spiegel said that the disappointing growth in user numbers was in part due to Snapchat’s preference not to bombard the app’s users with constant notifications and updates.
Facebook Develops Rival Features
Snapchat’s growth in user numbers pales in comparison to those of its most formidable competitor, Facebook. The rival firm have not only dwarfed Snapchat’s number of daily active users but have also managed to copy some of Snapchat’s key features, especially through its ownership of surrogate brands WhatsApp and Instagram.
Whatsapp now has 175 million daily active users who engage with its Snapchat Stories clone Status feature, while Instagram’s Snapchat Stories clone is used by over 200 million people daily.
However, Snap did have some positive numbers to share with investors during its first-ever earnings conference call when it came to the amount of time users spent in the app and how many snaps were created. Snapchat users were in the app on average over 30 minutes each day, and in total created in excess of 3 billion snaps on a daily basis.