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Snapchat co-founders lose $2 billion after poor Q1

16 Mai 2017

The company reported ($2.31) earnings per share for the quarter, missing analysts' consensus estimates of ($2.05) by $0.26.

Snapchat floated on the USA stock market in March and in early trading saw its valuation rise above £25 billion. But don't get it twisted, most of that loss was due to $US2 ($3) billion the company had to pay out in stock-based compensation expenses.

Shares of Snap Inc. Revenue also fell short of expectations, causing the stock to fall as much as 25 percent in after-hours trading Wednesday. Although Snap's revenue almost quadrupled to almost $150 million in the latest quarter, it's less than the $158 million that analysts polled by FactSet were expecting. But in the rest of the world, Snap only added a million daily users, reaching 40 million daily active users. The drop in stock price just shaved $1 billion from Spiegel's net worth overnight. On its first earnings call, CEO Spiegel focused on highlighting the company's progress in Android development. When questioned about this competition with Facebook Spiegel said that "Just because Yahoo has a search box doesn't mean they're Google".

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

Chief executive Evan Spiegel downplayed growth concerns, saying that Snapchat isn't interested in strategies - such as pestering users with notifications - that could pump up the number of people who use its app daily.

Investors are anxious that Snapchat will continue to falter as Facebook (NASDAQ:FB) continues to target the app's audience.

The company reported 166 million daily active users (DAU).

"Snapchat's growth is being cannibalized by Instagram Stories in literally every single market in the world", DJ Kang, SVP of Research at consumer research company ValuePenguin said in a recent report.

In a report last month, eMarketer noted that in the past Facebook and Instagram added new features similar to Snap's to boost their appeal, and that Snap has recently started doing the same by introducing new self-service tools for marketers. These companies launched Snapchat-esque features which allow users to take a photo and send it to someone, or display it at the top of the app as a "story".

BTIG analysts Richard Greenfield told Reuters that some investors were hoping the Snap would surprise them with a great financial performance.

Snap's secretive co-founder and Chief Executive Evan Spiegel has gone nearly two years since a major public address.

Snapchat co-founders lose $2 billion after poor Q1