Snap Revenue $6 Billion Down after Disappointing Financial Report
- Snap Inc. (NYSE:SNAP) fell short of expectations for first ever quarter as a publicly held entity.
- The Snapchat parent, reported its first quarterly earnings on Wednesday. The numbers did not go down well with investors.
- Reported revenue for Q1 of 2017 at $149.65 million compared to just $38.8 million for the same quarter in 2016.
- The company reported a massive $2.2 billion loss.
- Subsequently, Snap lost a massive $6 billion in market capitalization overnight.
Snap Revenue $6 billion Overnight Loss in Market Capitalization
Snap revenue did not meet the expectations of analysts and came as a disappointment to investors. Consequently, the parent company of Snapchat service went down $6 billion overnight in market capitalization after posting report that showed disappointing revenue and user growth. The report posted on Wednesday by this messaging and Media Company missed analysts’ Q1 revenue expectations (of about $158 million) and posted a massive $2.2 billion loss. However, about $2 billion of loss registered by Snap is attributed to stock-based compensations where for example, a monstrous $750 million went to Evan Spiegel, the company’s CEO.
After Wednesday’s first-ever Q1 report as a publicly held company, Snap stock opened on Thursday at $17.96 per share down by 22% from the close of Wednesday. This is equivalent to market value of about $20.7 billion down from $26.6 billion before the report.
Investors were not unhappy just with billions of losses and Snap revenue falling short of expectations, but also with the fact that the company registered slower-than-expected user growth. In the report, the company registered an increase of 8 million users to stand at an average of 166 million users. This is equivalent to 36% up year over year but only a dismal 5% up from 2016.
Looking closely at the revenue figures, investors are not likely to get calmer; For Q1 2017, Snap generated $0.90 per user, a significant positive from $0.32 a year ago. But this is way down from $1.05 registered in Q4. Although cyclic fluctuations can be expected, Snap is still in its early stages in its monetization strategies, so it is only normal that investors expected positive growth.
Snapchat Revenue Positive Metrics
It is worth noting that Snap also shared positive figure metrics during the report. Users spent more than 30 minutes per day in the app while more than 3 billion snaps were created daily according to Spiegel. CFO, Drew Vollero reported that Snap also generated “other” $8.3 million during the same quarter. (This “other” revenue is from sales of spectacles glasses a business that Vollero calls “a very modest program”).
Despite this dismal performance, and our professional conclusions, some analysts are still very optimistic with Snap revenue.
“Snap has become an innovation leader –for both consumers and advertisers — in the single fastest advertising medium today: mobile “We believe that if it sustains its current level of innovation, it can sustain premium growth for a long time and scale to profitability.” RBC Capital Markets’ Mark Mahaney noted on Thursday.