On Wednesday, the parent of the messaging app Snapchat reported earnings that missed Wall Street expectations in nearly every regard. It missed some Wall Street estimates as it competes with copycat messaging apps.
The company notes, however, that much of the losses resulted from one-time expenses related to stock bonuses shelled out after Snap Inc.'s successful initial public offering - with CEO Evan Spiegel reportedly having nabbed a cool $800 million, in fact. The camera company lost $6 billion in market value.
Shares in Snapchat's owner have sunk after it reported disappointing growth in the first three months of the year.
The performance echoed slides in Facebook and Twitter after they posted debut scorecards following their IPOs. Facebook shares tumbled 11 percent, while Twitter shares fell by 24 percent.
Snap co-founder and CEO Evan Spiegel, when asked about Facebook, said imitation is the sincerest form of flattery. The company warned its investors that it's bleeding money and may never achieve or maintain profitability in its IPO filing. "Just because of Yahoo! has a search box doesn't mean they're Google". A five per cent increase in new daily active users isn't the kind of growth investors were looking for.
Snapchat floated on the U.S. stock market in March and in early trading saw its valuation rise above £25 billion. Its daily active users (DAU) increased 36% from 122 million t0 166 million year-over-year.
Snap reported 166m daily users at the end of March, up 5 per cent from the previous quarter.
Snap's quarterly decline in revenue confirms the results of a recent study by RBC Capital Markets in partnership with Ad Age, which suggested that Snapchat is failing to impress marketers. "Time will tell whether that's possible", he added.
The company raked in $149.6 million in revenue, falling short of analyst expectations of $158 million.
Many analysts remained sceptical of Snap's long-term prospects.
Some $US2 billion of that loss was tied to stock compensation costs for the IPO as the company's youthful founders made hay. "It is an eye-popping number for sure", he said.
Along with Snap's slow growth, monetization of its user base also troubled investors. Out of this $8million came from sale of spectacles, a hardware product that the company has introduced.
On average, analysts were expecting first-quarter revenue of about $169 million, but Snap reported revenue of just $150 million. Almost all of the company's revenue comes from North America.
The company rebranded as Snap Inc last year, and its $3.4 billion public listing was the hottest technology offering in three years. That brought the seven-year-old company to more than $500 million in total revenue over those seven years.