Snap lost $2.2 billion last quarter

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NEW YORK — Snap, crackle, drop.

Snap, the parent company of Snapchat, whiffed on sales numbers and posted a staggering loss in its first earnings report since going public in March.

The company reported a net loss of $2.2 billion for the quarter due in large part to compensation costs tied to going public. It posted sales of $149.6 million for the March quarter, far below Wall Street estimates.

Snap’s user numbers also came in light. It reported 166 million daily active users in the March quarter, an addition of just 8 million from the previous quarter.

Its stock fell more than 20 percent in after-hours trading Wednesday, nearly erasing all the gains since its IPO.

Ever since Snap publicly filed its IPO paperwork, there have been concerns about the young company’s mounting losses, lofty valuation and the lack of voting rights for shareholders.

But leading up to the earnings report, all eyes were on the one deadly sin for an Internet company: Slowing user growth.

“The No. 1 question we receive about Snap is can it sustain its user growth and how big can it be,” Ralph Schackart, an analyst with William Blair, wrote in an investor note this month.

Snapchat added just 5 million daily active users in the final three months of last year, down from at least 10 million added in each of the previous four quarters.

That slowdown coincided with Facebook-owned Instagram launching a Snapchat copycat feature.

In the IPO filing, Snap repeatedly said its user numbers and engagement “can be lumpy and unpredictable.”

Facebook’s fierce competition with Snapchat has only heated up in the months since Snap’s IPO. Facebook has launched Snapchat-like camera features in Messenger, WhatsApp, Instagram and its flagship app.

All the copying appears to be paying off for Facebook.

Instagram revealed last month that there were more than 200 million daily active users for Instagram Stories, its Snapchat clone — or more than the number of daily users for Snapchat itself.

“I think we were a little bit late to the trend initially around making cameras the center of how sharing works,” Facebook CEO Mark Zuckerberg said on an earnings call this month, without naming Snapchat.

“But I do think at this point, we’re pretty much ahead in terms of the technology that we’re building.”

This week, Snap gave users the option to let their messages last indefinitely instead of disappearing after 10 seconds. The move could potentially make the service more intuitive to new users.

Snap also recently announced a new self-service advertising platform for brands in an effort to grow its ad sales business and begin making more money from the users it already has.

With its first earnings results, Snapchat risks suffering the same fate as its social media rivals.

Facebook and Twitter had plenty of hype around their IPOs only to crash after reporting earnings for the first time.

Facebook was driven down by investor doubts about its ability to make money from mobile devices. Twitter was hurt by concerns about slowing user growth.

Facebook eventually recovered; Twitter is still fighting to refute the Wall Street narrative.

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