May 11, 2017 07:19 AM EDT
This was Snapchat's first quarterly earning as a public company yet the excitement turned to disappointment its Q1 earnings missed the expected mark. Some observers are placing the 'blame' on Facebook's aggressive pursuit to create its own suite of similar Snapchat apps.
Snapchat's Q1 earnings were $149.6 million, which might look big but far from its expected $159 million revenue. That was enough to send its share to suddenly plummet more than 20 percent in after-hours trading.
Not only did Snapchat's revenue suffered but also its daily active user (DAU) growth as well. Although the report showed that it added 36 percent more daily active users compared to last year, Instagram still outpaced the company.
According to TechCrunch, Instagram Stories is hitting its 700 million users mark with its daily active users reaching the 200 million mark last March compared to Snapchat's 161 million users.
One of the main reasons for Snapchat's sudden low user growth is Facebook's aggressive push to transform its mobile application similar to Snapchat. Bloomberg reported that Facebook has been copying the company's many features and incorporated them in their mobile apps.
Snap, on the other hand, said that the $2 billion loss it sustained during the quarter was due to the stock-based compensation it initially offered in February.
Despite the disappointing Q1 earnings, Snap has shown some impressive performance and features. One of them is the new search feature which allows Snapchat users to search different stories shared by other users. Moreover, CEO Evan Spiegel said that Snap messages have also increased from 2.5 billion to 3 billion and its Oscars story has garnered 21 million viewers and 250,000 submissions.
Spiegel also added that the company has focused more on the quality, performance, and automation of Snapchat during the first quarter. Lastly, Snap's CEO can't help but blame Facebook over their loss, even comparing the competition to Yahoo and Google.
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