Snap Q1 earnings report: users grow but shares drop

Randall Padilla
May 14, 2017

After today's report, Kang says that he sees Snapchat's growth rate becoming even worse in the second quarter because of Instagram, and its stock price continuing to drop, following a similar pattern to Twitter. Snapchat shares were down nearly 25% in after hours trading.

Snap's net losses for the quarter soared from $104.6m (£80.9m) to $2.2bn, largely due to the costs of the IPO.

It's not unusual for tech startups to post many years of losses as they build market share and recoup their initial investments.

The disappearing messaging app, popular with teenagers, attracted huge interest when it went public in NY earlier this year - sending its shares 44% higher in its first day of trading.

Snap shares dropped almost 20 percent Thursday morning after its first quarterly report as a public company on Wednesday showed net losses of $2.2 billion, due to $2 billion in expenses for stock-based compensation.

While Snapchat now has 166 million active daily users, it only added eight million in the quarter just closed, compared to 13 million in the year-ago quarter.

Out of the approximate $150 million revenue of Snapchat, only around $8 million came from Snap Inc.'s Spectacles, reports CNBC.

Recently, facebook also mentioned that its widely popular messaging app- Watsapp has 175 million daily active users for its newly introduced stories-like Status feature. 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.

"Just because Yahoo has a search box it doesn't mean they're Google".

"Our favorable outlook on Snap stems not only from the company's ability to innovate and cater to millennials in high value markets, but also capture publisher content and consumer mindshare as video consumption grows on digital", said James Cakmak, an analyst at Monness, Crespi.

During a conference call with analysts, Snap CFO Drew Vollero said the company is "still in investment mode" despite recording a big loss during the period.

"If you want to be a creative company, you have to get comfortable that people will copy your stuff", he said. Edge Wealth Management LLC bought a new stake in shares of Snap during the first quarter valued at $257,000.

"The connectivity issue is a real problem in the developing world-it changes the use case of how people use Snapchat", said Spiegel.

Facebook eventually recovered; Twitter is still fighting to refute the Wall Street narrative.

Other reports by AllAboutTopnews

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