Snap shares have lost almost a quarter of their value after the parent company of popular Snapchat app reported slowing user growth and revenue just weeks after going public in a much-hyped IPO in March.
In after-hours trading late on Wednesday, Snap shares tumbled nearly 24 percent, wiping some $5 billion (4.59 billion euros) from Snap's market capitalization in the latest reversal after a red-hot March initial public offering (IPO), which was the biggest for a US tech company since Facebook in 2012.
Snap said its daily active users (DAUs) had risen 36.1 percent to 166 million in the first quarter from a year earlier, marking a slowdown from the 47.7 percent rise for the fourth quarter and 62.8 percent jump for the third quarter that the company reported in its IPO filing.
Although revenue jumped nearly four-fold over the year, to $149.6 million, it still fell of the average analyst forecast of $158 million, according to Thomson Reuters I/B/E/S.
Revenue was "a relatively disappointing number," Pivotal Research analyst Brian Wieser said. "To their credit," he said, "they did guide towards a number that would be lower, which it was."
In other Snap data, average revenue per user had was 90 cents in the first quarter, up from 33 cents the same quarter a year earlier but below the $1.05 per user in the fourth quarter of 2016. The company's net loss widened as a result, coming in at $2.21 billion, or $2.31 per share, in the first quarter, from $104.6 million, or 14 cents per share.
Snap's social media rivals such as Facebook's Instagram and WhatsApp have stepped up competition recently by offering camera-related features similar to Snap. Facebook said in April that Instagram Stories alone had reached 200 million daily active users.
Snap Chief Executive Evan Spiegel, who received a stock-based bonus worth nearly $600 million for taking the company public, shrugged off imitations when asked about Facebook by an analyst on a conference call to discuss earnings.
"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, Spiegel added: "Just because Yahoo has a search box doesn't mean they're Google."
Snapchat launched in 2012 as a mobile app that allows users to send photos, known as snaps, that vanish within seconds. The company rebranded as Snap Inc last year, and moved into the hardware space with Spectacles, its colorful sunglasses that record short videos to post on Snapchat.
Users created more than 3 billion snaps daily on average during the first quarter, up from more than 2.5 billion during the third quarter of 2016, the company said. Snap receives some revenue from branded or sponsored filters and lenses, but depends on advertising dollars for the bulk of its overall revenue.
Digital marketing firm eMarketer in March had trimmed its 2017 US advertising revenue forecast for Snap by $30 million to $770 million, citing higher-than-expected revenue sharing with the company's partners.
The total US digital advertising market is meanwhile expected to reach $83 billion, according to eMarketer, up nearly 16 percent from last year.
uhe/kd (Reuters, AFP)