Snap stock plunges in United States following earnings report

But when its IPO was announced in March, it had said that daily active Snapchat users during December were 161 million, on an average. Net loss rose from $104.6 million to $2.2 billion, which is thought to have been because of costs associated with the March IPO. On average, equities analysts expect that Snap will post ($0.51) EPS for the current fiscal year. The company's shares fell more than 20% in after-hours trading in NY.

Snap Inc (NYSE:SNAP) reported weaker-than-expected results for the first quarter of the fiscal year 2017 (1QFY17) after the closing bell on Wednesday, May 10.

Snap's revenue jumped almost four-fold year-over-year to $149.6 million but fell short of the average analyst forecast of $158 million, according to Thomson Reuters.

Growth in user base at Snapchat started slowing in 2016 after Instagram, now owned by Facebook, copied the "stories" feature of Snapchat, which allows users to post videos that will disappear in 24 hours.

Facebook Inc had also plunged after posting results for the first time in 2012, but has since ensconced itself as a Wall Street darling by transforming the company into an advertising giant. When questioned about this competition with Facebook Spiegel said that "Just because Yahoo has a search box doesn't mean they're Google". Also, according to Snap's earning presentation, the company has seen 3 billion plus snaps taken every day during the first quarter (Q1). J.P. Morgan expected Snap's first-quarter DAUs to grow to 169 million, while Monness, Crespi, Hardt & Co Inc pegged it at 173 million. If the company wants to expand its user base, it will have to broaden its reach to include older people.

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Its average revenue per user (ARPU) was $0.90, up by 181% from $0.32 in the same period previous year.

Many companies that just reported disappointing numbers might seek to soften the blow on their earnings calls by delivering more insight into how the numbers will improve in the future.

Snap is learning the first brutal lesson of the market: A bad earnings report can send a company into a nosedive.

"Snapchat's growth is being cannibalized by Instagram Stories in literally every single market in the world", DJ Kang, SVP of Research at consumer research company ValuePenguin said in a recent report.

"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.