Snap shares plummet as user growth slows, revenue misses

Author

11 May, 2017

Uh-oh. Wall Street was not impressed with Snap's first earnings report. The results are not good. It would mean a lot to us.

The social network's holding company of images and videos that disappear will, with this operation, lead the largest inflow of the last three years and one of the largest in the last decade. Hell, if you're over the age of 35, you probably don't even know how it works.

The big question has been whether Snap will sink or swim against social media sharks like Facebook.

He continued that he's not surprised to see other companies following Snapchat with a camera-first strategy. Companies that tend to have massive user growth and growing revenue streams (Facebook) don't tend to focus as much on how many "snaps" users look at.

The imitation game might have taken its toll.

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In Europe, the company also added 3 million daily users, hitting 55 million DAUs in that region in the first quarter.

Another factor which could be driving users away from Snapchat, is the fact that Facebook and Instagram have copied numerous features from Snapchat over the past 12 months.

Shares of the company plunged more than 20 per cent to $US18.30 in after-hours trading on Wednesday. Why the insane big loss?

Snapchat parent company Snap reported its first quarterly earnings today after a much-hyped IPO earlier this spring. That tactic didn't pay off during the first quarter as Snapchat's average revenue per user fell 14 percent to 90 cents in the first quarter from $1.05 in the fourth quarter - a drop of 17 percent. The company also saw year-on-year growth slow to its lowest in the past two years (adding 5 percent to hit 166 million users), and it missed revenue forecasts of $158 million as it came in shy at $150 million.

"It's a modest program", Vollero said in a conference call with analysts. After adjusting for the expected expenses, losses of $188.2 million were reported - greater than analysts anticipated. Slower-than-expected revenue growth and a meaningful deceleration in the company's daily active user growth have some investors anxious.


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