Snap Loses $6B in Market Value Despite CEO Spiegel's Confidence in Future
- Author: Zachary Reyes May 24, 2017,
May 24, 2017, 3:40
Snap said the number of daily active users grew to 166 million at the end of the quarter, a 36 per cent increase from a year ago but just five per cent higher than at the end of 2016.
Earlier this week, Snapchat announced it would allow users to send images and video without time limits for the first time, expanding one of the app's signature features in what is seen as an attempted fightback against Facebook. Snap took a loss of $2.2 billion for the quarter, or adjusted losses of 20 cents per share, but the company said approximately $2 billion of that was due to stock-based compensation costs related to the company's March IPO. That meant Spiegel lost $1 billion of his $5 billion fortune, though shares climbed to $18.76 on Thursday.
But Facebook's revenue was $1.18 billion in its first quarter as a public company. The company's daily active users (DAUs), increased 36.1% to 166 million in the first quarter from the same period previous year, but was lower than the increase of 47.7% in the fourth quarter.
Before Snap went public, the competition between the company and Instagram's Stories was heating up. Not to miss out on the trend, Facebook also launched disappearing stories this year. It is still growing, after all, and CEO Evan Spiegel made it clear on Wednesday that he's focused on the long-term.
It signed up 8m users in the last three months, fewer than analysts had been expecting.
In addition, Snapchat is also losing twice as much money as it was this time a year ago.
On his first earnings call with investors, Spiegel sounded fairly relaxed.
But perhaps what's most worrisome is that many analysts are saying this is just the beginning of the Snap selloff.
As popular as Snapchat is with young people, they won't be young forever.
Teens, though, don't necessarily want to use the same messaging and socializing tools that their parents and grandparents are using.
Along with Snap's slow growth, monetization of its user base also troubled investors.
For years, Facebook has been trying to copy Snapchat. It's essentially not a social networking application like Facebook or WhatsApp.