Wall Street finally meets Snapchat's $5 billion man

Snapchat co-founders lose $2 billion after poor Q1

Snapchat co-founders lose $2 billion after poor Q1

During its first quarter ending on March 31, Snap had 166 million daily active users, less than Wall Street estimates. Not only did Snap record a $2.2 billion loss for the first quarter, but its revenue was lighter than expected and its user growth decelerated.

It is also registered an increase of 36 per cent on the 122 million daily users the app had this time past year. DAUs increased 5 per cent quarter-over-quarter, from 158 million in Q4 2016.

Its average revenue per user (ARPU) was $0.90, up by 181% from $0.32 in the same period previous year. This lower revenue on a sequential basis was driven by a 14% sequential decrease in average revenue per user (ARPU). Missed revenue, slowing user growth and an earnings-per-share loss so big some financial journalists like Fusion's Felix Salmon said they briefly thought the number was a typo.

The shares closed at $22.98 on Wednesday, but are likely to sink on Thursday following the 23% fall in after-hours trading to $17.65. Its latest trading price almost went back to its initial public offering (IPO) price of $17 per share. Even without that one-time cost, however, Snap's loss doubled from the same quarter a year earlier.

One problem has been that Facebook blatantly copied one of Snapchat's best features with its new Stories option on Instagram, now used by around 200 million people.

Donald Trump to inform Congress of Nafta talks next week: Mexico
Any deal, however, would need agreement from the US sugar producers who brought an anti-dumping case against Mexican competitors. Chamber of Commerce in Washington D.C., said the chamber and other business leaders jumped into action when they heard about it.

While Facebook rebounded from its 2012 hit, Snap faces a hurdle that Facebook didn't, an equity strategist tells CNBC: It has Facebook as a competitor.

A survey of more than 3,000 people in the USA revealed consumer confidence in SnapChat was quite low, with 62 percent claiming they expect a SnapChat alternative to be released to which they will switch.

On the other hand, Eric Kim, a managing partner at Goodwater Capital said investors were surprised that Snap recorded the $2 billion stock-based compensation expenses in one quarter instead of spreading over time.

Both Facebook and Twitter had plenty of hype around their IPOs only to crash after reporting earnings for the first time. "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". That Facebook is going after Snapchat is not news, but the battle has now become somewhat ugly.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.