Brief: Snap’s stock plummets after first quarterly results since IPO

Snap has released its first quarterly results since its March IPO. Image credit: Anthony Quintano (CC BY 2.0).

The news:

• Snap – the company behind Snapchat – has just released its first quarterly results since its US$3.4 billion IPO back in March. Year-on-year revenues were up by a massive 286 percent – but the reported quarterly income of US$150 million still clocked in substantially lower than the US$158 million analysts had expected.
• User growth has also been slower than predicted, with Snap reporting 166 million daily active users against an expected 167.3 million. Reported quarterly net losses were US$2.2 billion, including US$2 billion of stock-based compensation expenses related to the IPO.

Why it matters:

• Snap shares plunged in value by as much as 25 percent in after-hours trading.
• With Snap’s mobile app business still at a relatively early stage and most investors not expecting it to turn profit for another couple of years, user growth is an all-important metric for judging the company’s prospects for success. Key rival Instagram’s Stories feature has seen user growth speed up in recent months and has now surpassed Snapchat in terms of user numbers, TechCrunch reports.

Source: CNBC