Snapchat’s IPO was explosive, valued at $24 billion. Their first public filing was equally explosive for the wrong reasons. The company reported a net loss of $2.2 billion in the first quarter, according to CNN. That’s double the loss from the same period last year.
Snapchat’s stock fell 25% in after-hours trading Wednesday, erasing nearly all the gains made since the stock debuted at $17.
Perhaps the biggest problem is competition from numerous other platforms successfully capturing Snapchat’s audience. Even Facebook has a clunky version of Snapchat stories on their messenger app now, everyone appears to believe Snap CEO Evan Spiegel struck gold with the features his company introduced. Instagram reports over 200 million daily active users on their story feature. Snapchat, by contrast, reports just 166 million daily active users in the first quarter, an addition of just 8 million from the one prior.
Mark Zuckerbeg, speaking at an earnings call earlier this month, sent a shot across the bow of their former acquisition target.
“I think we were a little bit late to the trend initially around making cameras the center of how sharing works,” Zuckerberg said, not mentioning Snapchat by name. “But I do think at this point, we’re pretty much ahead in terms of the technology that we’re building.”
Snapchat’s fate remains unclear, Facebook and Twitter also had similar IPO snags in their endeavors to go public. Initial returns aren’t promising, as many find the app to be a luxury rather than the necessity its founders were hoping it would be.