EC Snap Fails To Generate Interest And Value


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Earlier this year, social messaging service Snap (NYSE: SNAPdecided to test the public markets. Many were concerned about whether the company will manage to sustain its valuation under the constant glare of the stock market. Almost a quarter later, the verdict is not favorable. Since listing, the stock hasn’t appreciated much and decelerating growth figures coupled with the absence of profitability makes analysts wonder why the stock should have ever been bought.

Snap’s Financials

Last month, Snap recorded its first results as a public company. Q1 revenues grew 286% over the year to $150 million, missing the Street’s forecast of $158 million. The high percentage of growth is attributed primarily to the reason that it is only recently that Snap had figured out a revenue monetization model. Snap recorded a net loss of $2.2 billion for the quarter primarily due to the $2 billion spend related to stock-based compensation. Adjusted loss for the quarter came in at $0.20 per share compared with the $0.16 per share forecast by the market.

Snap doesn’t break out its revenues, but here are some interesting operating metrics for the company. At the end of the quarter, Snap recorded 166 million daily active users (DAUs), translating to a growth of 5% over the previous quarter. Compared with the previous year, Snap’s user growth rate has fallen from 48% a year ago to 36%. During the quarter, it added a modest 3 million new users in the North American region. It ended the quarter with 71 million DAUs for the region, which was flat over the previous quarter. In Europe, the company added 3 million users to end with 55 million DAUs, and in the Rest of World, it added just 1 million users to reach 40 million DAUs.

Snap’s average revenue per user (ARPU) isn’t very impressive either. For the quarter, ARPU fell to $0.90 from $1.05 a quarter ago. The number has improved significantly from the $0.32 reported a year ago.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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Adem Tumerkan 3 years ago Contributor's comment

Great article and Agree