{"id":340597,"date":"2017-05-11T04:05:41","date_gmt":"2017-05-10T20:05:41","guid":{"rendered":"http:\/\/techcrunch.com\/?p=1488087"},"modified":"2017-05-11T04:05:41","modified_gmt":"2017-05-10T20:05:41","slug":"snap-is-getting-absolutely-crushed-after-falling-short-of-wall-streets-expectations","status":"publish","type":"post","link":"https:\/\/people.utm.my\/asmawisham\/snap-is-getting-absolutely-crushed-after-falling-short-of-wall-streets-expectations\/","title":{"rendered":"Snap is getting absolutely crushed after falling short of Wall Street\u2019s expectations"},"content":{"rendered":"

<\/p>\n

Snap may have had a successful IPO, but that was pretty much wiped out after it reported its first-quarter earnings \u2014 where it completely whiffed on what Wall Street was expecting.<\/p>\n

The company said it brought in $149.6 million in revenue with a loss of $2.31 per share in the first quarter this year. Meanwhile, analysts expected the company to report a loss of 21 cents per share on revenue of around $158 million. In short, it doesn\u2019t look good \u2014 and it looks like its user growth came in soft as well<\/a>. The stock is down more than 20% in extended trading after it reported its first-quarter earnings.<\/p>\n

A drop this steep isn\u2019t all that surprising for a miss across the board. Since finally revealing the guts of its business when it went public, there were serious questions about its ability to grow and control costs like\u00a0the price of running its business on cloud services. Facebook, too, has aggressively copied some of Snap\u2019s most popular features like Stories. It\u2019s planted those features into Instagram, which already has hundreds of millions of users, which may<\/em> have stymied Snap\u2019s user growth. Whether or not that was the actual case, the optics likely matter nearly as much.<\/p>\n

The biggest share of those widening losses comes from a leap in its selling, general and administrative costs \u2014 which went from $24 million in the first quarter in 2016 to more than $1 billion in the first quarter of 2017. In total, Snap\u2019s losses ballooned to $2.2 billion, up from $104 million in the first quarter last year.<\/p>\n

\"\"<\/p>\n

To be sure, the first earnings report for any company going public can be a rough one. For Snap in particular, Wall Street only has a little more than two years of data on the company\u2019s newly-formed advertising business. That business is ballooning \u2014 growing 6x between 2015 and 2016 \u2014 but its costs are also mounting just as quickly. Wall Street is going to intensely scrutinize each new data point, whether that\u2019s user growth, changes in costs or the amount of money it generates.<\/p>\n

Snap, for the most part, was seen as the first major successful IPO of 2017. That opened the floodgates for a swath of companies to wrap up their IPOs and raise as much money as they could. Normally these kinds of companies want around a 20% pop when they go public to ensure everyone gets paid and they are still able to raise a lot of capital. But Snap\u2019s in particular was an important one because it would be a litmus test for Wall Street\u2019s appetite for risk for fresh IPOs in 2017.<\/p>\n

Uncertainty is never a good thing, especially in the face of massive advertising juggernauts like Facebook and Google. While those own practically the entire online advertising market, Snap has to go around and pitch investors that it is (or soon will be) a distinct option 3 alongside those two. It has to figure out how to be part of primary advertising budgets for brands with a diverse set of products and use cases, along with a highly-engaged user base, that can\u2019t be copied.<\/p>\n","protected":false},"excerpt":{"rendered":"

\"\" Snap may have had a successful IPO, but that was pretty much wiped out after it reported its first-quarter earnings — where it completely whiffed on what Wall Street was expecting. The company said it brought in $149.6 million in revenue with a loss of $2.31 per share in the first quarter this year. Meanwhile, analysts expected the company to report a loss of 21 cents per share on revenue… Read More<\/a><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

\"\"\/ <\/p>\n","protected":false},"author":5817,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[25],"tags":[59,66,26],"class_list":["post-340597","post","type-post","status-publish","format-standard","hentry","category-technology","tag-media","tag-techcrunch","tag-technology"],"_links":{"self":[{"href":"https:\/\/people.utm.my\/asmawisham\/wp-json\/wp\/v2\/posts\/340597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/people.utm.my\/asmawisham\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/people.utm.my\/asmawisham\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/people.utm.my\/asmawisham\/wp-json\/wp\/v2\/users\/5817"}],"replies":[{"embeddable":true,"href":"https:\/\/people.utm.my\/asmawisham\/wp-json\/wp\/v2\/comments?post=340597"}],"version-history":[{"count":0,"href":"https:\/\/people.utm.my\/asmawisham\/wp-json\/wp\/v2\/posts\/340597\/revisions"}],"wp:attachment":[{"href":"https:\/\/people.utm.my\/asmawisham\/wp-json\/wp\/v2\/media?parent=340597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/people.utm.my\/asmawisham\/wp-json\/wp\/v2\/categories?post=340597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/people.utm.my\/asmawisham\/wp-json\/wp\/v2\/tags?post=340597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}