Oh Snap! Shares drop 25 percent after disappointing results

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While Snap's stock dropped 23% by the market's open following its first-ever quarterly earnings report, Facebook's stock dropped about 14%.

The loss for the California firm known for its disappearing messages reflects some US$2 billion in stock compensation awarded at the time of the company's initial public offering.

The firm reported 36 per cent year-on-year growth in daily active users to reach 166m in the first quarter of 2017, below analyst forecasts of 167m users.

J.P. Morgan expected Snap's DAUs to grow to 169 million in the first quarter, while Monness, Crespi, Hardt & Co Inc pegged DAUs at 173 million.

"We still have a lot of work to do but we are excited by the amount of progress we have made in such a short time", Spiegel said.

Facebook's fierce competition with Snapchat has only heated up in the months since Snap's IPO.

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Snapchat has come under intense pressure in recent months from Facebook, which has added Snapchat-like features to its network of Messenger, Instagram and WhatsApp. Its Instagram Stories, with 200 million daily actives, remains larger than Snap's entire app.

Unlike Twitter and Facebook, LinkedIn was also profitable, with net income of $4.5 million.

Some are beginning to question whether Snapchat can continue to survive Facebook's onslaught. This will allow the company to add more tools to Snapchat in the future. Indeed, eMarketer projects that most of the Snapchat's usage gains in the United States going forward will come from older users.

One route Snapchat could take is acquisitions in the app space, buying up smaller but growing social apps that focus on groups. Android accounted for 30 percent of net additional users in the quarter.

Snap's first set of results had been nervously awaited for any signs that Facebook's attack had damaged it, and traders responded by sending shares down by over 24pc, hovering just above the $17 the company floated at. When adjusted for earnings before interest, tax, depreciation, and amortization (EBITDA), Snap lost $US188 ($255) million for the quarter.

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