Snap lost $2.2 billion last quarter

Pondering Snap's IPO over laser tag along with paintball

Snap, crackle, drop.

Snap (SNAP), the parent company of Snapchat, whiffed on sales numbers along with posted a staggering loss in its first earnings report since going public in March.

The company reported a net loss of $2.2 billion (yes, having a “B”) for the quarter, due in large part to $2 billion in compensation costs tied to going public. Even without which one-time cost, however, Snap’s loss doubled by the same quarter a year earlier.

Snap posted sales of $149.6 million for the March quarter, far below Wall Street estimates. Its user numbers also came in light. Snap had 166 million daily active users inside the March quarter, an addition of just 8 million by the previous quarter.

Its stock fell as much as 25% in after hours trading Wednesday, erasing nearly all the gains since which went public at $17 a share.

Evan Spiegel, Snap’s secretive 26-year-old CEO, told analysts on a conference call which he thinks about user growth “through the lens of creativity.”

“The more which we can remove friction by which creative process, the more which people want to use which service, along with which’s our strategy,” Spiegel said.

The vague response did little to ease Snap’s nosediving stock.

Ever since Snap publicly filed its IPO paperwork, there have been concerns about the young company’s mounting losses, lofty valuation along with the lack of voting rights for shareholders.

however leading up to the earnings report, all eyes were on the one deadly sin for an Internet company: slowing user growth.

“The No. 1 question we receive about Snap can be can which sustain its user growth along with how big can which be,” Ralph Schackart, an analyst with William Blair, wrote in an investor note which month.

Snapchat added just 5 million daily active users inside the final three months of last year, down by at least 10 million added in each of the previous four quarters. which slowdown coincided with Facebook (FB, Tech30)-owned Instagram launching a Snapchat copycat feature.

Related: Meet Snapchat’s billionaires along with millionaires

inside the IPO filing, Snap repeatedly said its user numbers along with engagement “can be lumpy along with unpredictable.”

Facebook’s fierce competition with Snapchat has only heated up inside the months since Snap’s IPO. Facebook has today launched Snapchat-like camera features in Messenger, WhatsApp, Instagram along with its flagship app.

All the copying appears to be paying off for Facebook. Instagram revealed last month which there were more than 0 million daily active users for Instagram Stories, its Snapchat clone — or more than the number of daily users for Snapchat itself.

“I think we were a little bit late to the trend initially around producing cameras the center of how sharing works,” Facebook CEO Mark Zuckerberg said on an earnings call which month, without naming Snapchat. “however I do think at which point, we’re pretty much ahead in terms of the technology which we’re building.”

When pressed on the call about competing with Facebook, Spiegel said he expects which “everyone can be going to develop a camera strategy.” Then he took a dig: “Just because Yahoo incorporates a search box doesn’t mean they’re Google.”

Just which week, Snap gave users the option to let their messages last indefinitely rather than disappearing after 10 seconds. The move could potentially make the service more intuitive to completely new users.

Snap also recently announced a completely new self-service advertising platform for brands in an effort to grow its ad sales business along with begin producing more money by the users which already has.

With its first earnings results, Snapchat risks suffering the same fate as its social media rivals.

Both Facebook along with Twitter (TWTR, Tech30) had plenty of hype around their IPOs only to crash after reporting earnings for the 1st time. Facebook was driven down by investor doubts about its ability to make money by mobile devices. Twitter was hurt by concerns about slowing user growth (sound familiar?).

Facebook eventually recovered; Twitter can be still fighting to refute the Wall Street narrative.

sy88pgw (completely new York) First published May 10, 2017: 4:25 PM ET

Snap lost $2.2 billion last quarter

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