Fri, May 12, 2017 - Page 10 News List

Snap Inc shares plummet after posting Q1 loss

AFP, SAN FRANCISCO

A woman stands in front of the logo of Snap Inc on the floor of the New York Stock Exchange while waiting for the company’s market debut in New York City on March 2.

Photo: Reuters

Snapchat parent Snap Inc saw its shares pummeled on Wednesday after posting a loss of US$2.2 billion in its first quarterly results since its share offering earlier this year.

The loss for the California firm known for its disappearing messages reflects about US$2 billion in stock compensation awarded at the time of the company’s initial public offering.

Snap disappointed analysts with reported revenue of US$149.6 million in the three months ending in March.

That was a jump of 286 percent from a year ago, but below Wall Street estimates of about US$158 million, and a significant miss for the fast-moving social media segment.

The stock plunged 24 percent in after-hours trade to US$17.45 following the results.

ACTIVE USERS

Snap said the number of daily active users grew to 166 million at the end of the quarter, a 36 percent increase from a year ago, but just 5 percent higher than at the end of last year.

Cofounder and chief executive Evan Spiegel told a conference call the company has been working on performance improvements and promoting its Android application, which could offer more growth globally compared with the Apple iOS system.

“We still have a lot of work to do, but we are excited by the amount of progress we have made in such a short time,” Spiegel said.

However, some analysts remained skeptical.

Ross Gerber of the investment firm Gerber Kawasaki said on Twitter: “Snap user growth is almost zero. Losing US$50 mil a month. This is so poorly run. Run and hide. This is worse than Twitter.”

FACEBOOK CHALLENGE

Analysts have offered mixed views about Snap’s future, debating whether it can mimic the success of Facebook or end up in the tech junkyard.

Asked if he feared the company would be crushed by Facebook, Spiegel said he remained committed to a strategy “to deliver value through creativity.”

“You have to get comfortable with the fact that people are going to copy you if you make great stuff,” he said. “Just because Yahoo has a search box it doesn’t mean they’re Google.”

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