Economy

Snap Q1 earnings report: users grow but shares drop

Snap Q1 earnings report: users grow but shares drop

Other revenue doubled to US$8.3 million compared to the same quarter a year before, but many reports are suggesting sales of Spectacles were relatively soft, compared with the hype around them.

The company lost $2.2 billion, but Snap explained that the massive loss was due to stock-based compensation to employees following the IPO.

Some investors were hoping Snap would surprise them with big numbers in its first quarterly report, BTIG analyst Richard Greenfield said. After the results, Snap shares fell immediately, trading almost $18.19 which is the lowest since it went public.

Shares in the owner of Snapchat have fallen by a quarter after its first set of results since floating on the stock market missed Wall Street expectations.

"If you want to be a creative company, you've got to get comfortable with and enjoy the fact that people are going to copy your product if you make great stuff", he said.

Confidence in Snapchat was also dented last month when Instagram revealed its Stories feature - similar to Snapchat's Story - had surpassed 200 million daily users, well ahead of Snapchat. Among those expenses, CEO Evan Spiegel received a $750 million bonus for taking the company public.

Snap's 36% daily active user growth was particularly disappointing when put into context with how fast the key metric is decelerating. Most young people using the app were found to believe that they would not be using it once they turned 35.

Just this week, Snap gave users the option to let their messages last indefinitely rather than disappearing after 10 seconds.

In recent months, Facebook has launched Facebook Stories, a near-identical clone of Snapchat's most popular feature, also called Stories. DAUs increased 5 per cent quarter-over-quarter, from 158 million in Q4 2016.

Snap also recently announced a new self-service advertising platform for brands in an effort to grow its ad sales business and begin making more money from the users it already has.

It wasn't the day Snap Inc - the parent company of Snapchat - had planned.

Nomura and Pivotal Research both appear concerned, expecting Snap stock to fall to $14 and $9 per share, respectively. Revenues for the quarter rose by an impressive 286 per cent but still fell short of forecasts by around $9m, and the company's adjusted loss of $188.2m was higher than expected.

William Blair reissued their outperform rating on shares of Snap Inc (NYSE:SNAP) in a report released on Thursday morning.