Snap lost $2.2 billion last quarter

Posted May 19, 2017

After the earnings announcement, Snap's shares immediately fell more than 24 percent in after-hours trading.

Snap Inc., the parent of popular disappearing-messaging app Snapchat, reported quarterly revenue that missed analysts' estimates and slowing user growth in its first results after its red-hot IPO, amid stiff competition from Facebook Inc.

Snap's net loss was a staggering $2.2 billion, which was much greater than analysts expected.

Snap Inc reported a rise in daily active users to 166 million, up 36% from 122 million a year earlier, but not a huge increase since the IPO, and well below the 200 million users of Instagram Stories. Instagram stories was launched only a few months ago.

Its CEO Evan Spiegel received $750 million stock-based bonus for taking Snap public.

"I think, at the end of the day, just because Yahoo, for example, has a search box, it doesn't mean they are Google", Spiegel said.

The slowing number of daily users is likely the biggest cause of anxiety for investors. Most young people using the app were found to believe that they would not be using it once they turned 35, which apparently is the age when people become adults.

Still, there's another way Facebook is already historically beating Snapchat. However, analysts on average had expected revenue of $158 million, according to Thomson Reuters.

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

The fact that many Snapchat users are sticking with Snapchat is valuable.

The CEO also stressed advertising during the call, saying the company had made "significant progress" in automating the advertising process during the quarter.

"Right now they clearly have a loyal user base in the younger population, but the over 30 year old demographic is one of the most attractive segments for advertisers due to their spending power", Eric Kim, managing partner at venture capital firm Goodwater Capital, wrote in a report.

Snap faces intense competition in the social media realm, with many companies building almost identical versions to some of Snapchat's most popular features, principally Stories.