Snapchat's growth stalls in Facebook's shadow

It's not unusual for tech startups to post many years of losses as they build market share and recoup their initial investments. Twitter shares cratered 24 per cent the next day, while Facebook's tumbled 11 per cent, still the biggest-ever one-day losses for both.

Asked during the earnings call if Facebook scares him, Snap's CEO Evan Spiegel laughed.

The call marked Mr Spiegel's debut as an executive publicly answering questions about his company, after much practice during Snap's IPO roadshow with investors behind closed doors. "Just like how Google forced companies to develop their own search strategies, Snapchat is forcing competitors to develop a camera strategy", he added. This represents a slowdown of 36% compared to the same period a year ago. Monness, Crespi, Hardt & Co Inc had pegged them even higher at 173 million.

Snap CEO Evan Spiegal said: "It is an easy way to grow daily actives quickly but we do not think those techniques are sustainable over the long term and it impacts our relationship with customers", according to The Guardian. The company's shares fell more than 20% in after-hours trading in NY.

Facebook has now launched Snapchat-like camera features in Messenger, WhatsApp, Instagram and its flagship app. The company said in April that Instagram Stories alone had reached 200 million daily active users.

But the alarm bells were really sounding over user growth, which analysts had warned was the most important aspect to watch - particularly after Facebook reported a blockbuster quarter.

According to Snap CEO Evan Spiegel, connectivity issues, as well as low bandwidth in developing markets, are holding back uptake in many global markets.

During an earnings call, chief executive Evan Spiegel, sought to reassure anxious investors.

That was a jump of 286 percent from a year ago but below Wall Street estimates of around US$158 million, and a significant miss for the fast-moving social media segment.

BTIG analysts Richard Greenfield told Reuters that some investors were hoping the Snap would surprise them with a great financial performance.

However, revenue for Facebook during its first quarter following its IPO in 2012 was $1.18 billion.

On the loss front, nearly $2 billion of the loss went towards stock compensation costs related to the IPO. "It is an eye-popping number for sure", he said.

The app's new Infinity feature lets users add "limitless snaps" and "looping videos" for the first time.

The company rebranded as Snap Inc last year, and its $3.4 billion public listing in March was the hottest technology offering in three years. Its daily active users (DAU) increased 36% from 122 million t0 166 million year-over-year.

Vanessa Coleman

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