Snap Inc. has just released its Q1 2017 earnings reports, the company’s first since going public a few months back. The company, which relies heavily on Snapchat for revenue, has disappointed investors in the company with its Q1 earnings report. Over the last quarter, the company only managed to grow Snapchat’s user base by 8 million, which represents a growth rate of 5 percent. Now, while this represents an increase in growth when compared to the 3.2 percent rate from Q4, the figure is far from stellar. After all, Instagram Stories which was launched less than a year ago now boasts a user base of over 200 million. Even WhatsApp Status, which was only launched back in January already has more users than Snapchat.
Now, compared to last quarter, the company actually managed to see some growth, but the company’s growth declined compared to Q1 last year. Snapchat managed to grow its daily active user base though, compared to Q1 2016, we’re looking at a 36 percent increase in that regard. Not all was bad for the company, though, with Snap boasting that over 3 billion snaps are created each day, along with the fact that average usage has increased from 25 minutes to an average of 30 minutes daily. Unfortunately for Snap, these two details were not enough to distract investors away from the most important figures – total revenue and losses. Snap Inc. reported total losses of over $2.2 billion a significant increase in losses when compared to last year’s $104 million loss in Q1 2016. Unsurprisingly, due to the significant loss, Snap’s shares dropped significantly. Earlier this week the company’s shares reached a high of $23.32 per share, but are now trading as low as $18.19, which is the lowest since the company went public.
It’s clear that unless Snap Inc. comes up with a plan to significantly reduce costs, as well as increase revenue, the company may soon be in trouble. After all, the growth of Snapchat has decreased significantly since the release of Instagram Stories and Spectacles are yet to become a sustainable source of income for the company. It’ll remain to be seen if Snap Inc. can turn their situation around in time, but after the reaction the company received from investors after this earnings report, it’ll remain to be seen what the company will do to persuade traders to invest in the company.
