Snap shares tank 23 percent after reporting $2.2 billion net losses

Snapchat shares were down nearly 25% in after hours trading.

It wasn't just the Snaps that were disappearing on Wednesday.

Snapchat had eight million new users in the past three months but this was much less than analysts expected.

Its daily active user count did increase about 5 percent from last quarter, and 36 percent from a year ago to 166 million, but that is still well short of Instagram Stories, a clone that Mark Zuckerberg says has more than 200 million users. As Recode notes, a good portion of that $2 billion came in the form of an $800 million bonus given to Snap CEO Evan Spigel in exchange for taking the company public.

Following the results, Wall Street was divided among the bulls and the bears, the latter of which seemed to believe that the risks can't be overlooked.

Wednesday was a big day for Snap, as it reported its first quarterly earnings since it went public at the beginning of April.

According to the company, revenue in the quarter ended March 31 was $149.6 million, which was below analysts' expectation of $158 million. The slowing growth was blamed on Facebook's concerted efforts to mimic Snapchat's unique features, with Instagram's Stories feature outpacing Snapchat's own and reaching 200m DAUs. Snap lost $2.31 per share, but was expected to only lose 21 cents. Ever since Facebook started copying Snapchat's Stories feature into all of its app, Snap's growth has slowed.

Spiegel had a biting response to Facebook's copycat tactics: "Just because Yahoo has a search box doesn't make it Google".

Daily active users grew from 122 million in Q1 2016 to 166 million in Q1 2017, an increase of 36 per cent year-over-year.

When pressed on the call about competing with Facebook, Spiegel said he expects that "everyone is going to develop a camera strategy".

But according to the company's initial public offering (IPO) filing, the number of daily active users grew almost 48 percent in the final quarter of previous year and rose approximately 63 percent in the quarter before that.

"People are going to copy your product if you build great stuff", he said.

  • Zachary Reyes