Snap's elusive task: Evading Facebook's looming shadow

Snapchat's growth stalls in Facebook's shadow; stock plunges

Snapchat's growth stalls in Facebook's shadow; stock plunges

Shares of the company plunged more than 20 percent to $18.30 in after-hours trading on Wednesday.

Snap Inc., parent company of Snapchat, reported a net loss of $2.2 billion (-$2.31 a share) during its first quarter as a public company, stemming mostly from stock-based compensation issued to employees for its initial public offering in March. Its net loss per basic share was $2.31 compared to $0.14 per share in the year-ago quarter.

Snap hit 166 million daily active users in the first quarter of 2017 for a growth rate of 5 percent.

Another factor which could be driving users away from Snapchat, is the fact that Facebook and Instagram have copied numerous features from Snapchat over the past 12 months. "Just because Yahoo has a search box, doesn't mean they're Google", Spiegel added.

A survey of more than 3,000 people in the United States revealed consumer confidence in SnapChat was low, with 62 percent claiming they expect a SnapChat alternative to be released to which they will switch.

EUROPOL admits stunned by scale of cyberattack
In this May 12, 2017, photo, a display panel with an error can be seen at the main railway station in Chemnitz, Germany. Two security firms - Kaspersky Lab and Avast - said they identified the malicious software in more than 70 countries.

The slowing rate of growth is not surprising for the United States market, given Snapchat's huge popularity among its core group of young users. eMarketer estimates that 84.4% of 12- to 17-year-olds, and 78.6% of 18- to 24-year-olds, use the app at least once per month.

Snap posted sales of $149.6 million for the March quarter, far below Wall Street estimates. J.P. Morgan expected Snap's first-quarter DAUs to grow to 169 million, while Monness, Crespi, Hardt & Co Inc pegged it at 173 million.

The CEO also stressed advertising during the call, saying the company had made "significant progress" in automating the advertising process during the quarter.

But Snap is still in the shadow of Facebook, which has seen major traction with users and advertisers by ripping off Snapchat's core features. For example, JPMorgan Chase expected the daily active users to reach 169 million.

On average, users are spending 30 minutes and creating 3 billion snaps per day on Snapchat. Facebook's Instagram has been beefing up its camera features, making its app more like Snapchat. Not to miss out on the trend, Facebook also launched disappearing stories this year.

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