11 May 2017•Update: 11 May 2017
By Barry Eitel
SAN FRANCISCO
Shares of Snap, creator of the popular app Snapchat, plummeted more in after-hours trading Wednesday following a disappointing quarterly earnings report.
The report, released after markets closed, is the first from Snap since the company went public in March. Snap revealed user growth has slowed considerably in its first quarter that ended March 31.
The number of users logging into the Snapchat app every day is now 166 million worldwide, a 36 percent increase from the previous quarter.
But according to the company’s initial public offering (IPO) filing, the number of daily active users grew nearly 48 percent in the final quarter of last year and rose approximately 63 percent in the quarter before that.
Quarterly revenue exploded to $149.6 million in the first quarter, almost a four-fold increase from the quarter before, but analysts were expecting revenue to reach around $158 million.
The company lost $2.2 billion, but Snap explained that the massive loss was due to stock-based compensation to employees following the IPO. Co-founder and chief executive Evan Spiegel received a $750 million bonus for taking the company public.
The slowing number of daily users is likely the biggest cause of anxiety for investors. Instagram Stories, a Snapchat-like feature of the social media app that allows users to string together images and video clips, now has 200 million daily users – 34 million more than Snapchat – according to an earnings report released recently by Instagram’s owner, Facebook.
On his first earnings call with investors, Spiegel sounded fairly relaxed. He noted that Snapchat users create 3 billion posts every day and the company is trying to avoid common user growth strategies like a lot of push notifications. He seemed to brush off any gloominess investors were feeling.
“It's just early days for us,” he said.
In after-hours trading toward the end of the call, Snap stock fell to $17.46 per share, more than 24 percent from Wednesday’s close of $22.98.
