Snap lost $2.2 billion last quarter

Snap lost $2.2 billion last quarter

Snap lost $2.2 billion last quarter

The company raked in $149.6 million in revenue, falling short of analyst expectations of $158 million.

The company lost $2.2 billion, but Snap explained that the massive loss was due to stock-based compensation to employees following the IPO. And although Snapchat had a 36 per cent jump in daily active users on a year over year basis, it added just eight million new users (five per cent), from last quarter.

Snap CEO Evan Spiegel said in the earnings call that the company refuses to engage in the type of "growth hacking" used by other companies, including sending lots of push notifications to get users to "do something unnatural". The company said its users create more than 3 billion snaps daily on average.

By the market's open on Thursday, Snap's stock was down 23%, and the 26-year-old had shed about $1.22 billion overnight from his net worth. "Just because Yahoo has a search box doesn't mean they're Google", he added, referring to the competition between the two internet-search companies in the late 1990s and early 2000s.

Despite the drop in shares, Snap is still growing faster than its chief rival Facebook, which has adopted Snapchat-like features including disappearing 24-hour "stories" on its main platform as well as its subsidiary, Instagram. When Facebook tried to rip off the Snapchat stories feature during August 2016, with Instagram stories; it worked in the favor of Facebook. But at that point, Facebook had 552 million regular users, more than three times as many as Snapchat. The Company's flagship product, Snapchat, is a camera application that helps people to communicate through short videos and images known as a Snap.

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Facebook also allows users to tweak photos on their smartphones with visual details like a rainbow or a beard of glitter, also similar to Snapchat. Digital marketing firm eMarketer in March had trimmed its 2017 United States advertising revenue forecast for Snap by $30 million to $770 million, citing higher-than-expected revenue sharing with the company's partners.

Facebook also had a rough start after its first earnings report, but has since become a powerhouse.

Many companies that just reported disappointing numbers might seek to soften the blow on their earnings calls by delivering more insight into how the numbers will improve in the future.

Snap faces intense competition in the social media realm, with many companies building almost identical versions to some of Snapchat's most popular features, principally Stories.

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