Snapchat launched in 2012 as a mobile app that allows users to send photos that vanish within seconds.
The company rebranded as Snap Inc last year, and its $3.4 billion public listing was the hottest technology offering in three years.
Snap Inc shares plunged in after-hours trading, after the parent of the popular disappearing-messaging app Snapchat reported slowing user growth and revenue that fell short of analyst estimates amid stiff competition from Facebook. Shares of the company (SNAP, -19.10%) fell more than 24% to $17.39 after the first quarterly earnings report since Snap’s red-hot initial public offering in March.
Snap said its daily active users (DAUs) rose 36.1% to 166 million in the first quarter from a year earlier, down from the 47.7% rise in users for the fourth quarter and 62.8% jump for the third quarter that the company had reported in its IPO filing.
On Snap’s first earnings call as a public company, there had been a particular burning question for Snapchat founder Evan Spiegel: “Does Facebook scare Snapchat?”
Following an earnings report that came in below analysts’ expectations on sales, profit and user growth—prompting Snap stock to plummet nearly 25% after-hours towards its IPO price of $17 —26-year-old CEO Spiegel laughed at the question.
Having prefaced the query noting that Facebook (FB, -0.33%) CEO Mark Zuckerberg had announced a new camera feature with augmented reality last month, positioning the social media company in direct competition with Snapchat, which describes itself as a camera company.
“At the end of the day, just because Yahoo has a search box, it doesn’t mean they’re Google,” Spiegel said.
Spiegel also suggested that Facebook was imitating Snap (SNAP, -19.23%), and he expected other companies to do the same, interpreting it as a form of flattery. “If you want to be a creative company, you’ve got to get comfortable with and basically enjoy the fact that people are going to copy your products if you make great stuff,” he said. “Now I think with Snap, we believe that everyone’s going to develop a camera strategy.”
Still, for a company that touts cameras as a core part of its business, Snap’s single hardware product, Snapchat Spectacles, accounts for a tiny part of its sales. Of Snap’s $150 million in revenue in the first quarter of 2017, only $8 million, or 5%, came from the picture-taking glasses, the company said on the earnings call. In the final quarter of 2016, when Snap began selling them, Spectacles made up $4.5 million of the company’s $166 million in revenue.
