Snapchat shares plummet as company posts $2.2 billion loss

Violet Tucker
May 14, 2017

Snap, the company best known for its Snapchat app, reported a $2.2 billion loss in its first quarter as a publicly traded company. On average, equities analysts expect that Snap will post ($0.51) EPS for the current fiscal year.

Snap's IPO in March. Its user numbers also came in light.

Snap shares plunged to $17.59, their lowest since the initial public offering on March 2, wiping off more than $6 billion of its market value. So bad that company CEO Evan Spiegel just took a major hit in the net worth department.

The new features announced yesterday include a Loop tool that lets users specify if the Snaps they send play once or loop repeatedly until the recipients are ready to close them. The majority of the losses were attributed to stock-based compensation associated with the company's recent IPO.

As with Twitter, user and revenue growth are going to be important for Snap going forward.

"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.

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Revenue was $149.6 million, nearly four times as much as a year ago but falling short of Wall Street estimates of $158.6 million.

The new features enable users to loop videos for repeated play or to re-view an incoming Snap for as long as they like without the normal automatic deletion kicking in after one viewing. But Snap said it has no plans to give any financial guidance, because the company doesn't want to make short-sighted decisions for the benefit of quarterly results. But at that point, Facebook had 552 million regular users, more than three times as many as Snapchat.

And the cycle continues, as Facebook won't be far behind in copying that, too. The Los Angeles-based company said it added 8 million daily active users in the period, for a total of 166 million, with growth from a year earlier slowing to 36 percent.

At its recently concluded F8 developer conference in San Jose in the US, CEO Mark Zuckerberg launched "Camera Effects Platform" to encourage augmented reality (AR) effects.

A lot is riding on Spiegel to build products that delight people, said analyst Greenfield. "And I think, at the end of the day, just because Yahoo, for example, has a search box, it doesn't mean they are Google". The move could potentially make the service more intuitive to new users.

On Wednesday, the uncomfortable nature of public quarterly earnings reports was on display.

Other reports by Guamnewswatch

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