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Snap stocks plummet after releasing first earnings report since IPO

Snap stocks plummet after releasing first earnings report since IPO

Shares of the company fell more than 24 percent to $17.39 after the first quarterly earnings report since Snap's red-hot initial public offering in March.

During a conference call about the quarterly earnings Snap founder and CEO, Evan Spiegel, said the company had focused the first quarter on performance, quality and automation, emphasizing the strides the company has made in Android usability.

"You have to get comfortable with the fact that people are going to copy you if you make great stuff". The company however is no where close to achieving profitability. Not only did the company miss expectations, it showed slowing users growth and posted enormous losses for the quarter. Its loss in Q1 2016 was just $104 million.

"Snap reported light 1Q17 earnings, representing a decline in revenues vs. 4Q16, which while consistent with the company's prior guidance, nonetheless represents a surprising element of seasonality in the business, and risks of less growth ahead than we previously expected.As a very-early stage company, Snap remains incredibly hard to value vs. other companies in our coverage universe".

Snapchat has come under intense pressure in recent months from Facebook, which has added Snapchat-like features to its network of Messenger, Instagram and WhatsApp.




All the copying appears to be paying off for Facebook. An estimated 8 million new Snapchat accounts were created in the last quarter, the slowest user-growth quarter yet. "But I do think at this point, we're pretty much ahead in terms of the technology that we're building".

"At the end of the day, just because Yahoo has a search box doesn't mean they're Google", Spiegel says, a clumsy metaphor that improbably compares Snap to Google's position in the search engine wars.

Snapchat, however, has already been more than eclipsed by Instagram Stories.

Not all bad news however for the picture messaging app. Snapchat a 286 percent increase in revenues, as the group's advertising operation increased rapidly.

Shares of the parent company of Snapchat were down on Thursday following the earnings report.