In its first quarter as a public company, Snap Inc. (SNAP, Financial) posted a $2.2 billion net loss.
The Snapchat creator reported a net loss of 20 cents per share, worse than the expected net loss of 16 cents. It reported revenue of $149.6 million, missing expectations of $158 million.
Snap reported 166 million global daily active users, barely missing the expected 167.3 million users. The daily user base, however, grew 36% from the 122 million users it reported in the year-ago quarter.
The company did manage to meet expectations for average revenue per user, which was 90 cents.
Following the announcement on Wednesday, the stock tanked 22% in after-hours trading to $18.02, the lowest it has been since its initial public offering. While both Facebook (FB, Financial) and Twitter (TWTR, Financial), its two biggest competitors, also fell after releasing their first earnings reports as public companies, neither failed to meet expectations.
The company attributed $2 billion of its loss for the quarter to stock-based compensation expenses related to its IPO.
The popular image-sharing app’s parent company debuted on the New York Stock Exchange in early March, selling 200 million shares for $17 each, valuing it at $23.8 million. In its first day of trading, the price climbed 46.8% above its IPO price to $25.95 per share. The company raised about $3.9 billion in its IPO, making it the largest stock market entrance for a Southern California company.
In addition to proving its mettle in the social media space, Snap now faces fierce competition from Facebook, which has added a story feature similar to Snapchat’s across its platforms. Facebook CEO Mark Zuckerberg announced in April that Instagram Stories had hit 200 million DAUs, surpassing Snapchat.
The company must also fight for advertisers. According to the Wall Street Journal, Facebook and Alphabet Inc. (GOOG, Financial) (GOOGL, Financial) retain nearly all the growth in digital advertising, making it hard for new players to gain any traction in the space.
With a market cap of $25.7 billion, Snap closed at $22.98 on Wednesday with a price-book (P/B) ratio of 17.6.
Disclosure: I do not own any stocks mentioned in the article.
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