Snapchat lost $2.2 billion last quarter

19 May, 2017, 11:36 | Author: Leticia Walters
  • Snapchat lost $2.2 billion last quarter

Shares of the company fell more than 24 percent to $17.39 after the first quarterly earnings report since Snap's red-hot initial public offering in March.

To say that Wall Street was disappointed in the first earnings report of Snap Inc., the parent company of the app Snapchat, might be an understatement, as the company reported a $2.2 billion loss and lower than estimated revenue.

Analysts surveyed in advance by Yahoo Finance expected Snap to post losses of 19 cents per share on $157.98 million in revenue.

After closing the day at $22.98, Snap's shares tanked 21.5% in overnight trading and continued to fall during trading on the New York Stock Exchange (NYSE) on Thursday, closing at $18.05, a loss in value of almost $6bn, according to The Guardian. Mark Zuckerberg would later call Facebook's first year as a public company "extremely turbulent" but also said going public was a "valuable process" that helped him get to know his company much better than he did before.

Following Snap's disastrous earnings release last night, Snap CEO Evan Spiegel implied that his company would win the competition for disappearing messages in the way Google won search.

A survey of more than 3,000 people in the USA revealed consumer confidence in SnapChat was low, with 62 percent claiming they expect a SnapChat alternative to be released to which they will switch. Snap lost $2.31 per share in the first quarter, compared with 14 cents a year ago.

Snapchat, however, has already been more than eclipsed by Instagram Stories. However, revenues were slightly higher than Street expectations at $149.6 million.

While the company did see revenue losses, it also saw an increase in daily active users. Snap calculates its ARPU as quarterly revenue divided by the average Daily Active Users. These features aren't what many users go to Snapchat for. The company recently introduced a new feature, New World Lenses, that lets users add 3-D augmented-reality objects, often referred to as "stickers", to their Snapchat posts. Facebook has launched several clones of Snapchat Stories, including Messenger Day, WhatsApp Status, and Facebook Stories.

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