While Facebook thriving, Snap posts $2B loss last quarter

Owen Stevens
May 12, 2017

Its daily active users (DAU) increased 36% from 122 million t0 166 million year-over-year. But when its IPO was announced in March, it had said that daily active Snapchat users during December were 161 million, on an average.

Snap shares, which priced at $17 for its IPO and soared more than 40 percent in its first day of trading, slid more than 25 percent on Wednesday to $17.09 after the market closed.

J.P. Morgan expected Snap's DAUs to grow to 169 million in the first quarter, while Monness, Crespi, Hardt & Co Inc pegged DAUs at 173 million.

Even more startling is the fact that Snap lost money despite recording an average revenue per user of 90 cents, which is 14 percent higher than last quarter; up 181 percent from the same quarter a year ago.

Revenue surged 286% year-over-year to $150 million, but that still fell short of Wall Street's projected $158 million.

Its CEO Evan Spiegel received $750 million stock-based bonus for taking Snap public.

Nevertheless, Snap Inc's performance for the Q1 of 2017 has majorly disappointed many investors and analysts. But, he added, "just because Yahoo has a search box, it doesn't mean they're Google".

That was two million fewer than expected, but 36% higher than the same period previous year. Its nearest competitor Facebook-owned Instagram now has 700 million users, with its "Stories" feature having 200 million daily active users.

But Snapchat is trying to stay ahead of the curve.

The popular image-sharing app's parent company debuted on the New York Stock Exchange in early March, selling 200 million shares for $17 each, valuing it at $23.8 million. It also said that the company lost $2.31 per share, though most of that was due to expenses related to stock-based compensation. The move could potentially make the service more intuitive to new users.

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.

Facebook has introduced various clones of Snapchat stories and seems like it is taking a toll on both, Snapchat earnings and Snapchat users.

The app's new Infinity feature lets users add "limitless snaps" and "looping videos" for the first time.

Marketing software firm Crowdtap CEO Matt Britton said several celebrities are migrating to Instagram from Snapchat.

Other reports by VgToday

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