$6 Billion Wiped Off Snapchat Value as Shares Collapse
Shares in Snapchat’s parent company Snap Inc. have plummeted in value by almost a quarter – to the tune of $6 billion. The drop comes after the first earnings report since the company went public showed a slowdown in user growth and revenue.
On Tuesday, the company posted a $2.2 billion loss in the first quarter, much of which was tied to compensation following the company’s IPO in March. After adjusting for the expected expenses, losses of $188.2 million were reported – greater than analysts anticipated.
The company’s stock dropped 23 percent in after-hours trading following the report, wiping a staggering $6 billion off the company’s value, according to Reuters.
In the first 3 months of 2017, Snapchat’s daily active users increased by only 36.1 percent, continuing a downward spiral evident in the second half of 2016 (62% in Q3, 47% in Q4).
Snapchat has seen increased competition in the past 12 months, with Facebook and Instagram both adding ‘Stories’ – a feature almost identical to Snapchat’s own of the same name.
CEO Evan Spiegel referenced their new competitors in a call with investors, saying“If you want to be a creative company, you’ve got to get comfortable with and enjoy the fact that people are going to copy your product if you make great stuff.”
“Just because Yahoo has a search box doesn’t mean they’re Google,” he said.