Shares tumbled 23% in after-hours trading to wipe some $6 billion from Snap's market value, a reversal for the company after a red-hot March initial public offering that was the biggest for a USA tech company since Facebook's 2012 debut. Losses this quarter amount to $2.2 billion after the company issued stock bonus compensations following its successful IPO, out of which CEO Evan Spiegel himself got $750 million.
The newly public company plummeted by 23% to $17.75 a share on the first day of regular trading after a disappointing earnings report that saw user growth slow to its lowest pace in years.
In its ad revenue forecast for the next few years, eMarketer predicted that Snapchat will continue to see faster revenue growth than any other digital company, although future growth rates are expected to be slower than they were in 2016. But by then, Facebook had 552 million, more than three times Snapchat's.
"At the end of the day, just because Yahoo has a search box doesn't mean they're Google", Spiegel says, a clumsy metaphor that improbably compares Snap to Google's position in the search engine wars.
As with Twitter, user and revenue growth are going to be important for Snap going forward. The company generated $149.9 million in revenue overall in the first quarter of 2017.
In recent months, Facebook has launched Facebook Stories, a near-identical clone of Snapchat's most popular feature, also called Stories.
Snapchat parent company Snap built a reputation for secrecy, but now, as a public company, it has to lay its cards on the table and open up the books to investors.
Facebook, which once made a $3 billion bid for Snapchat, has upped the ante by making the camera a central piece of its apps and offering features similar to Snap on its platforms, including Instagram and WhatsApp.
They noted a "surprising element of seasonality" in the business, while lamenting the risk that Snap wouldn't grow by as much as the firm previously expected.
Snap's revenue and daily active users during the quarter increased strongly on a year-over-year basis, but both metrics fell short of expectations.
Snap Inc.'s quarterly report showed that the newly-public company lost a mind-numbing $2 billion in the previous quarter alone. Stifel Nicolaus reissued a "hold" rating on shares of Snap in a report on Thursday.
Not all bad news however for the picture messaging app. Snapchat a 286 percent increase in revenues, as the group's advertising operation increased rapidly.