Snapchat shares plummet as company posts $2.2 billion loss

Snapchat shares plummet as company posts $2.2 billion loss

Revenue jumped almost four-fold to $149.6 million but fell short of the average analyst forecast for revenue of $158 million, according to Thomson Reuters I/B/E/S. The company attributes $2 billion of that to "stock-based compensation". Most recently, Facebook, which owns Instagram and once upon a time offered $3 billion to buy Snapchat, announced that Stories reached 200 million daily active users. DAUs increased 5 per cent quarter-over-quarter, from 158 million in Q4 2016. Among those expenses, CEO Evan Spiegel received a $750 million bonus for taking the company public.

Shares in Snap have sunk after it reported slow growth in its first quarter.

In the IPO filing, Snap repeatedly said its user numbers and engagement "can be lumpy and unpredictable".

Rob Sanderson, an analyst at MKM Partners, says investors are anxious that unless [the company] quickly starts adding users, Snap's ability to sell more advertising will stabilize at some point.

Snapchat had eight million new users in the past three months but this was much less than analysts expected.

Facebook has now launched Snapchat-like camera features in Messenger, WhatsApp, Instagram and its flagship app.

Whether or not Spiegel should be concerned about Facebook is another question. "If you want to be a creative company, you have got to be comfortable with and enjoy the fact that people copy your products if you make great stuff", Spiegel said. Then he took a dig: "Just because Yahoo has a search box doesn't mean they're Google".

Despite the disappointing results, Snap's nascent ad business is seeing traction via its programmatic API, which is now live in 24 countries.

The question has been whether Snap can quickly grow its user base and, in time, turn a profit.

Unlike Twitter and Facebook, LinkedIn was also profitable, with net income of $4.5 million.

The social network argued during its earnings call that numerous teenage users it has can't be reached by traditional television or print advertising, according to the Verge. Eighty percent of the platform's DAUs fall into the demographic.

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