Snap shares plummet as investors mark down first earnings report

Posted May 14, 2017

The owner of the Snapchat application attracted fewer users than anticipated in the first quarter of this year, a result that drove stocks to plummet more than 20 percent. After the results, Snap shares fell immediately, trading almost $18.19 which is the lowest since it went public.

Wall Street expects Snap to post a quarterly loss of 19 cents per share, according to Thomson Reuters I/B/E/S. Analysts expect revenue of close to $158 million, roughly four times the $38.8 million figure from a year earlier, but down about 5 percent from $165.7 million for the fourth quarter of last year.

Snapchat added just five million daily active users in the final three months of a year ago, down from at least 10 million added in each of the previous four quarters.

Confidence in Snapchat was also dented last month when Instagram revealed its Stories feature - similar to Snapchat's Story - had surpassed 200 million daily users, well ahead of Snapchat.

He said that improvements to the performance of the Android app led Snapchat to double the amount of net additional Android devices on the network, and Android accounted for 30 percent of net additional users in the quarter.

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Snap's first-quarter ad load was still less than 1 ad per DAU, per hour, which badly lags Facebook and Instagram. Then he took a dig: "Just because Yahoo has a search box doesn't mean they're Google". Plus, Snap's brings in a quarter of the revenue that Twitter does, per user, leaving room to expand.

In Europe, the company also added 3 million daily users, hitting 55 million DAUs in that region in the first quarter.

The announcement will show how much ad revenue the company behind the Snapchat app generated from January through March and how much money it spent on employees, technology and research.

When asked if he feared Snap would be crushed by Facebook, Spiegel replied: "You have to get comfortable with the fact that people are going to copy you if you make great stuff".

Overall, out of the 35 firms that cover Snap, 13 of them have assigned the equivalent of a buy rating, while 17 think the stock is a hold and five have issued the call to sell.

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Yes, the Twitter-or- Facebook debate is back in full force and, unlike when investors bid up Snap shares following its IPO, sentiment is decidedly more Twitter-y today. Snap has a 1-year low of $18.16 and a 1-year high of $29.44.

Young, fast-growing companies such as Snap often can't predict how their business will change quarter to quarter.

According to its pre-IPO filing with the U.S. Securities and Exchange Commission, Snap reported 161 million daily average users by the end of 2016.

"These changes allow us to continue evolving the Snapchat service and provide a foundation for introducing even more creative tools for making fun Snaps", the company noted in a blog post yesterday.

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