Snapchat Shares Fall by 24 percent


Snapchat has been a publicly traded company for a little over two months now – but the first results are looking discouraging. The growth rate of Snapchat increased by less than expected and the slowdown worries investors. Additionally, the company reported a net loss of 2.2 billion US, largely due to costs for the IPO.

As Snapchat hits 166 million average daily active users, there are signs of it's success slowing down. And at this point, the business is all about growing. The year-over-year growth rate has been falling for a while now, now being 36 percent lower than what it was in 2016. Last quarter it fell by 48 percent. At this point, Snapchat is looking at the same problems that Twitter has – weak monetization and lagging user growth.

So what happened to Snapchat? For one, it got copied. A lot. At this point, Instagram Stories has 200 million daily active users, which is already more than what Snapchat reported. Facebook is pushing that even further, adding Snapchat-like features to Messenger and WhatsApp. “Everyone is going to develop a camera strategy”, Snapchat founder Evan Spiegel said when asked about the competition. “Just because Yahoo has a search box doesn't mean they're Google”, he confidently added.

Investors, however, appeared much less confident. After the earnings announcement, the price per share of Snapchat fell by as much as 25% in afterhours trading. It hit the lowest it has been since the IPO. The difference between Google and other search engines has always been that Google was one step ahead – both in terms of users and in terms of innovation. Snapchat is lagging behind on the user front and not really providing anything groundbreaking on the other.

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