Snap is getting destroyed after its earnings disaster (SNAP)

Jay Anderson
May 19, 2017

Snapchat's parent company Snap Inc lost almost a quarter of its value on Wednesday when its newly listed shares went into a nosedive after the company reported a $2.2bn loss and slowing growth, reports The Guardian.

The company lost $2.2 billion, but Snap explained that the massive loss was due to stock-based compensation to employees following the IPO.

The disappearing messaging app, popular with teenagers, attracted huge interest when it went public in NY earlier this year - sending its shares 44% higher in its first day of trading.

The figures show Snap and Snapchat continue to grow in all aspects, but that increase has slowed down on a quarterly basis, particularly after Facebook introduced Instagram Stories as a jab to its rival past year.

Snap CEO Evan Spiegel is "so arrogant" and needs to find some humility, CNBC's Jim Cramer said Thursday.

Snapchat has tried to become more like its bigger rival by courting new users and, with them, advertisers. The earnings report was announced the day after several new features were added to the Snapchat app. However, revenues were slightly higher than Street expectations at $149.6 million.

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It is also an increase of 36% on the 122 million daily users the app had this time a year ago.

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.

"If you want to be a creative company, you have got to be comfortable with and basically enjoy the fact that people copy your stuff", Spiegel said.

Snapchat's user growth slowed to a halt in the final three months of 2016, which coincided with Instagram launching its Snapchat copycat feature.

From a long-term business perspective, Snap Inc. has to come up with ideas to not only expand its user base beyond messaging, but also beyond millennials. Daily active users continues to be a concern as Facebook and Instagram continues to ramp up features that undermine the strength of Snapchats platform.

Facebook, in order to not miss the trend, launched their own disappearing stories in 2017.

Other reports by BadHub

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