Snap Inc (ticker: SNAP) shares tumbled, shedding nearly 20 percent of their value on Thursday after its first ever quarterly earnings report as a public company disappointed investors. Still, some Wall Street analysts remain optimistic about the long-term prospects for Snap, the parent company of the popular messaging app Snapchat.
Despite a huge surge in revenue from $38.8 million in the first quarter of last year to $149.7 million in first quarter of 2017, Snap fell short of the average analyst revenue estimate of $158 million. Snap also reported a net loss of $2.21 billion, or $2.31 per share. Analysts had expected a loss of $1.92 per share.
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Perhaps the most disappointing number of all for Snap investors was its 166 million daily active users, or DAUs. While that number is up 36.1 percent compared to a year ago, it was short of analyst expectations of 167.3 million DAUs and represents the third consecutive quarter of slowing growth. Snap reported daily average user growth of 47.7 percent in the fourth quarter and 62.8 percent in the third quarter of 2016.
Several Wall Street analysts remain bullish on the stock, which opened Thursday’s session within a dollar of its IPO price of $17 per share.
Oppenheimer upgraded Snap to “outperform” following the earnings report and believes Snapchat’s focus on “few-to-few communication” differentiates the platform from rivals Facebook ( FB), Instagram and Twitter ( TWTR).
“We believe this is an important distinction and will act as a durable competitive differentiator for Snapchat,” analyst Jason Helfstein says.
JMP Securities also maintains its “market outperform” rating on Snap.
“While we would have liked to have seen at least in-line DAU net additions in the quarter, engagement continues to ramp with users now averaging 30-plus minutes per day on Snapchat and the performance issues on Android impacting DAU growth appear to be improving as Android net adds doubled,” analyst Ronald Josey says.
Nomura is not as optimistic. The firm slashed its price target for Snap to $14 and said the stock faces “fierce competition from deeper-pocketed rivals including FB and continues to trade at a valuation that looks quite lofty to us.”
[Read: The 10 Most Anticipated IPOs of 2017.]
Snap investors dealing with huge losses on Thursday can take comfort in the fact that other large social media IPO stocks also crashed following their first public earnings reports. Shares of Facebook, Twitter and Yelp Inc ( YELP) all fell at least 10 percent on the day following their first earnings reports.
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Snap Inc Stock Crashes Despite Impressive Growth originally appeared on usnews.com
