WHAT IT IS
- Snap Inc., parent company of Snapchat, posted a $2.2 billion loss and decelerated user growth in the first earnings report as a public company.
- Snap Inc.’s stock price fell 23% in after-hours trading, translating into a $6 billion loss in market value for them.
- CEO Evan Spiegel reassured investors that Snap Inc. was expecting this kind of performance and is up for the challenge to compete against rivaling companies.
WHY IT MATTERS
Snap Inc.’s first earnings report does not define the company, but is making investors question whether they can compete with rivaling social media companies like Facebook. Now that Snap Inc. is a publicly traded company, they have to care about meeting Wall Street’s expectations.
WHERE WE ARE NOW
- Snap Inc. will have to find innovative ways to outperform competitor Facebook.
- Instagram and Whatsapp, owned by Facebook, continue to release new features that are similar to Snapchat features.
- Snap Inc. still has a higher growth rate than Facebook and their revenue continues to increase on a quarterly basis.
THINGS TO THINK ABOUT
- Will advertisers care more about customer engagement than customer size?
- Is Snap Inc. simply following the patterns set by Facebook and Twitter which is that stock price tends to be highly volatile for the first few earnings reports?