Snap, the company best known for its Snapchat app, reported a $2.2 billion loss in its first quarter as a publicly traded company. Net losses rounded out to about $2.2 billion - although $2 billion of that was part of the payout in stock-based compensation after the March IPO. With $8 million in revenue, Snapchat likely sold around 60,000 pairs of Spectacles during the quarter.
Analysts estimated that Snap needed to make at least $158 million for this quarter in order to put investors at ease, but it only managed to deliver $149.6 million. This sets it apart from its rivals, but could also make it more hard for businesses to target ads to its users based on their personal connections.
Analysts from J.P. Morgan anticipated Snap's DAUs to increase to 169 million by the end of the first quarter. The owner of the Snapchat application attracted fewer users than anticipated in the first quarter of this year, a result that drove stocks to plummet more than 20 percent. CEO Evan Spiegel got a $750 million bonus for taking Snap public.
"It's just early days for us", he said.
The vague response did little to ease Snap's nosediving stock.
A large reason for the underachievement is due to the number of users slowing down.
"The No. 1 question we receive about Snap is can it sustain its user growth and how big can it be", Ralph Schackart, an analyst with William Blair, wrote in an investor note this month. The company recently said Instagram Stories alone had reached 200 million daily active users.
In addition, Snapchat is also losing twice as much money as it was this time a year ago.
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Snap's IPO in March.
And the cycle continues, as Facebook won't be far behind in copying that, too. And although Snapchat had a 36 per cent jump in daily active users on a year over year basis, it added just eight million new users (five per cent), from last quarter. "But I do think at this point, we're pretty much ahead in terms of the technology that we're building".
"We believe that everyone is going to develop a camera strategy", Spiegel said.
Just because Yahoo has a search box doesnt mean theyre Google, he said.
It wasn't just the Snaps that were disappearing on Wednesday.
On average, users are spending 30 minutes and creating 3 billion snaps per day on Snapchat.
Still, the current rivals of Snapchat have managed to outpace it.
"Snap reported light 1Q17 earnings, representing a decline in revenues vs. 4Q16, which while consistent with the company's prior guidance, nonetheless represents a surprising element of seasonality in the business, and risks of less growth ahead than we previously expected.As a very-early stage company, Snap remains incredibly hard to value vs. other companies in our coverage universe".