The message isn't good as Snapchat owner's shares fall
Snap Inc shares plunged yesterday after the owner of Snapchat reported slowing user growth and revenue in its first earnings report as a public company, missing some Wall Street estimates as it competes with copycat messaging apps.
Shares tumbled 23pc in after-hours trading to wipe some $6bn from Snap's market value, a reversal for the company after a red-hot March initial public offering that was the biggest for a US tech company since Facebook Inc's 2012 debut.
The stock fell to $17.66, just above its IPO price of $17. Some investors were hoping Snap would surprise them with big numbers in its first quarterly report, BTIG analyst Richard Greenfield said.
"The fact that they failed to live up to expectations, let alone exceed them, disappointed people," he said. The performance echoed slides in Facebook and Twitter after they posted debut scorecards following their IPOs.
Twitter shares cratered 24pc the next day, while Facebook's tumbled 11pc, still the biggest-ever one-day losses for both.
Snap chief executive Evan Spiegel sought to reassure investors during an earnings call, fielding a dozen questions that ranged from strategy to how it would deal with competitors.
He also did not shy away from one query that allowed him to take a feisty jab at Facebook.
"If you want to be a creative company, you've got to get comfortable with and enjoy the fact that people are going to copy your product if you make great stuff," he said.
Making a comparison to the search industry, he said: "Just because Yahoo has a search box doesn't mean they're Google."
Snap said its daily active users (DAUs) rose 36.1pc to 166 million in the first quarter from a year earlier, marking a slowdown from the 47.7pc rise for the fourth quarter and 62.8pc jump for the third quarter that the company reported in its IPO filing.
The slowing rate of growth was in line with an estimate from JPMorgan, which accurately expected 166 million DAUs for the first quarter. Monness, Crespi, Hardt & Co had pegged them even higher at 173 million.
Snap's March IPO priced above the company's target range as investors put aside concerns about a lack of profits and voting rights to get a piece of the action.
The IPO raised $3.4bn and gave the company a market valuation of roughly $24bn, and shares surged 44pc in their first day of trading.
Facebook, which made a $3bn bid for Snapchat in 2013, has upped the ante by offering camera-related features similar to Snap on its platforms, including Instagram and WhatsApp.
The company said in April that Instagram Stories alone had reached 200 million daily active users.
Snapchat's growth was faster than Facebook, however, which said its overall daily user base grew 18pc year-over-year in the first quarter, as well as Twitter, which reported growth of 14pc in DAUs from a year earlier. Snap's revenue was $149.6m but fell short of the average analyst forecast of $158m. (Reuters)