Snap Inc. Gets An Investor Pounding, Stocks Drop By 25%

Recently, reports started flooding in that Instagram’s massive presence in the global market is stifling growth for Snapchat. This quickly became evident during Snap Inc.’s first earnings call as the company’s uninspiring performance led droves of investors to abandon ship. As a result, Snap’s stocks took a terrible beating, pushing shares down by 25 percent by the end of the day.

This development isn’t really a surprise since analysts have been fearing for the worst ever since Snap went public, Venture Beat reports. The disastrous revenue projections and the dismal growth in the number of users is a reflection of a reality that the company desperately tried to paint with bright colors. Unfortunately, it wasn’t enough to prevent investors from making a run for it.

Analysts estimated that Snap needed to make at least $158 million for this quarter in order to put investors at ease, but it only managed to deliver $149.6 million. To be fair, this is a significant jump compared to a year ago, by 286 percent, in fact. However, this hardly made an impression on investors since that was about the time that the company started monetizing its platform.

With regards to user growth, Snap reported 166 million daily active users for its social media app for Q1 2017. That’s a neat 36 percent growth compared to last year’s Q1. When compared to the 158 million that Snap had by Q4 2016, however, the growth is only at a dismal 5 percent and that’s what touched a nerve in investors.

Even as he was faced with the challenging prospect of confronting an angry mob of investors and analysts, however, Snap CEO Evan Spiegel still found time to throw shade at Facebook. The matter of Instagram’s Stories cloning success was brought up during the earnings call and Spiegel proceeded to compare Facebook to Yahoo, CNN reports.

"We believe that everyone is going to develop a camera strategy," Spiegel said. "Just because Yahoo has a search box doesn't mean they're Google."