Snapchat's Growth Stalls In Facebook's Shadow; Stock Plunges

Facebook’s shadow continues to hang over Snapchat as its parent company reported disappointing numbers.

Snap Inc., best known for disappearing messages even though it has evolved to become much more, had a massive loss and saw user growth continue to slow down in the first three months of the year. Its revenue was below Wall Street’s expectations in its first quarterly earnings since its initial public offering of stock.

Snapchat has tried to become more like its bigger rival - at least when it comes to success - by courting new users and with them, advertisers.

Instead, Snapchat reported 166 million daily active users in the latest quarter, an increase of just 36 percent from a year earlier. In its first post-IPO report in 2012, Facebook also disappointed investors when it grew its daily user base by only 32 percent. But by then, Facebook had 552 million, more than three times Snapchat’s.

WHERE THE MONEY WENT

About $2 billion of Snap’s $2.2 billion net loss in the January-March period was for IPO-related stock compensation costs. Facebook had similar costs, about $1.3 billion.

But Facebook’s revenue was $1.18 billion in its first earnings report as a public company. Although Snap’s revenue nearly quadrupled to nearly $150 million in the latest quarter, it’s less than the $158 million that analysts polled by FactSet were expecting.

Put another way, revenue was hardly enough to overcome the huge IPO expenses.

Snap’s stock $5.50, or 24 percent, to $17.48 in after-hours trading.

Wednesday’s results from Snap come just a week after Facebook reported solid first-quarter results, with double-digit revenue growth - as it has consistently since its IPO.

COPYCATS

Facebook has been bent on copying Snapchat ever since the social media giant tried unsuccessfully in 2013 to buy it.