Published: Sun, May 14, 2017
Money | By Armando Alvarado

Snapchat shares plummet as company posts $2.2 billion loss

Snapchat shares plummet as company posts $2.2 billion loss

Snap's net loss widened to $2.21 billion, or $2.31 per share, in the first quarter, from $104.6 million, or 14 cents per share, due to stock-based compensation related to the IPO. Even without that one-time cost, however, Snap's loss doubled from the same quarter a year earlier.

Snap said average revenue per user rose 181.3 percent to 90 cents in the first quarter. Snap calculates its ARPU as quarterly revenue divided by the average Daily Active Users. Consequently, SNAP stock tumbled more than 23% in after-hours trade yesterday, wiping off about $6 billion of its total market value.

"People are going to copy your product if you build great stuff", he said.

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Along with Snap's slow growth, monetization of its user base also troubled investors.

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Snapchat has come under intense pressure in recent months from Facebook, which has added Snapchat-like features to its network of Messenger, Instagram and WhatsApp.

He emphasized that users were still highly engaged with Snap. "A stronger Android offering could lead to faster long-term DAU growth", they wrote. Facebook as a whole dwarfs Snapchat eight times over with 1.8 million users.

And the cycle continues, as Facebook won't be far behind in copying that, too. Facebook introduced a feature very similar to Snapchat's "Stories" for its main network and the photo-sharing platform Instagram, which analysts anxious would eat away at Snapchat's already slowing growth rate.

"We believe that everyone is going to develop a camera strategy", Spiegel continued, before dropping what can only be described as an epic burn. "But I do think at this point, we're pretty much ahead in terms of the technology that we're building". When questioned about this competition with Facebook Spiegel said that "Just because Yahoo has a search box doesn't mean they're Google". For example, it added a slew of augmented reality features earlier this month, and announced Tuesday that it would allow users to replay messages indefinitely. The move could potentially make the service more intuitive to new users. The company generated most of its revenues from advertising, but brought in $8.3m from elsewhere, largely driven by its Spectacles smartglasses. Stifel Nicolaus reissued a "hold" rating on shares of Snap in a report on Thursday.

Shares in Snapchat's parent company Snap Inc. have plummeted in value by nearly a quarter - to the tune of $6 billion.

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