Millennials CRUSHED by Snapchat Earnings Fail

21 May, 2017, 15:40 | Author: Darnell Patrick
  • Snapchat is losing its money

Snap Inc shares plunged on Wednesday after the owner of Snapchat reported slowing user growth and revenue in its first earnings report as a public company.

In the three months that ended March, Snap reported first quarter revenue of $149.648 million, which marked a rise of 286% year over year, compared to last year's mark of $38.798 million. On the other hand, Facebook revenue was at $1.18 billion during its first reported quarter; Snap now at $150 million, disappointing analysts, who were expecting at least $158 million.

Facebook, which once made a $3bn bid for Snapchat, has upped the ante by making the camera a central piece of its apps and offering features similar to Snap on its platforms, including Instagram and WhatsApp. The co-founders Evan Spiegel and Bobby Murphy each lost more than $1 billion.

In addition, average revenue per user (ARPU) was up from $0.32 in the same quarter past year to $0.90 in the first quarter.

Snap missed out on the Wall Street Estimates after struggling to compete with rival apps, such as Facebook, copying Snapchat.

The disappearing messaging app, popular with teenagers, attracted huge interest when it went public in NY earlier this year - sending its shares 44% higher in its first day of trading.

Originally launched by Snapchat, the "Stories" feature shows photos and videos shared in chronological order that disappear after 24 hours.

Matt Britton, CEO of social media marketing company Crowdtap and an expert on millennials, believes Snapchat has "gotten ahead of itself" in pushing out new features, when what it does best - and what it's most used for - is one-on-one messaging. You could use it with just one other person, if you wanted.

"Just because Yahoo has a search box doesn't mean they're Google", he said.

The number was below analysts' expectations and year-on-year growth also slipped to 36 per cent from 48 per cent in the previous quarter. It is Snapchat which has popularised animated AR selfie masks and facial filters.

"Right now they clearly have a loyal user base in the younger population, but the over 30 year old demographic is one of the most attractive segments for advertisers due to their spending power", Eric Kim, managing partner at venture capital firm Goodwater Capital, wrote in a report. But to try and appeal to a 15-year-old at the same time as a 30-year-old might end up alienating both groups.


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