Snapchat shares plummet as Snap Inc's first results are out
- Author: Zachary Reyes May 21, 2017,
May 21, 2017, 15:45
The stock price of Snap Inc (NYSE: SNAP), the owner of virtual messaging app Snapchat, plummeted 23% during the extended trading on Wednesday after reporting its quarterly financial results for the first time as a public company.
Snap (SNAP) posted its first quarterly report as a public company on Wednesday and the results shed light on numerous social media upstart's vulnerabilities: Snap is struggling to maintain user growth and its path to profitability remains unclear. Meanwhile, it added only 8 million more daily active users than in the previous quarter. In its first post-IPO report in 2012, Facebook also disappointed investors when its daily user base grew by only 32 percent. Facebook's Instagram has been beefing up its camera features, making its app more like Snapchat.
Snap reported a loss of $2.21bn for the first quarter, mainly due to stock-based compensation linked to the $24bn float in March.
But Facebook's revenue was $1.18 billion in its first quarter as a public company.
Snap missed out on the Wall Street Estimates after struggling to compete with rival apps, such as Facebook, copying Snapchat.
On their first day of trading in NY in March, Snap shares closed 44% higher at $24.48, valuing the company at $28bn.
Facebook, in order to not miss the trend, launched their own disappearing stories in 2017. It's essentially not a social networking application like Facebook or WhatsApp.
Snapchat, on the other hand, tried to go the feature-rich way by offering "stories", "discover" and other non-messaging features that don't necessarily appeal to the demographic that it now rules over - millennials.
"If we had just in the beginning encouraged snapchatters to add all their friends in (their) contact book instead of just few of them, they might be really uncomfortable creating snaps and adding them to their stories", he said, according to a transcript of the call. However, the results were lower than $1.05 per user in the fourth quarter of 2016. The maker of the wildly popular photo sharing and instant messaging app Snapchat underperformed on almost every key metric in the recently ended quarter.
"They need to acquire the next Snapchat - companies that are doing one thing right", Britton said.