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Some quick highlights as to why the stock is being punished. > Adjusted Ebitda Loss $188.2M, Est. Loss $176.9M > 1Q Daily Active Users 166M, Est. 168M > 1Q R

Some quick highlights as to why the stock is being punished. > Adjusted Ebitda Loss $188.2M, Est. Loss $176.9M > 1Q Daily Active Users 166M, Est. 168M > 1Q Rev. $149.6M, Est. $158.6M > 1Q Loss/Shr $2.31 I'm guessing the big issue is the miss on Daily active users. This is the same thing that caused the street ot hammer twitter. Rule of thumb for non profitable tech companies.... If you are a company that isn't making a profit and you continually preach look at the users, look at the users. and then fail to even hit your target on that, you're going to get punished.....heavily. Or put another way, you can either make a profit or make your non GAAP numbers, but you have to atleast hit one of the two. One other issue from the Bloomberg momentary.... > A very key number here is revenue per user. Snap's results today are indicating average revenue per user at 90 cents. This is down from $1.05 (14%) from what it reported for Q4 2016, before its IPO. To be completely fair, SNAP management wanted full control to build for the long term and Facebook was down 12% after their first earnings report and Twitter was down 24% so it might just be that its painful for rookie CEOs to manage a public company. Too bad for employees that this comes before the lock up period ends. EDIT Just on the earnings call, they said they don't break out Spectical's numbers but the revenue it generated was about $8 Million.

tlogan 9y ago
I do not think that investors are concern about net loss - at least I'm not. I'm disappointed by anemic growth: Facebook has 18 percent increase year over year. They have ~2B users [1] This q Snapchat had growth of ~5% which will be about ~20% per year. But they are 10x smaller than Facebook. [1] Facebook 5/3/17 earning report
- monkmartinez 9y ago
  I saw Scott Hanselman spin up 1000 Azure instances in a demo today; How many bots can each instance support? Instant growth. How much social media activity/growth is not human?
  - zeusk 9y ago
    > How much social media activity/growth is not human? As much as I agree with you, that kind of activity especially by first party or those related is called market manipulation. SEC and investors won't take lightly to it.
    - monkmartinez 9y ago
      And who will blow the whistle? One person could deploy a bot army to juice numbers. On a related note, the market itself is controlled by HFT bots. Don't rock the boat too much and no one is the wiser. Edit: Would love to some actual debate on this rather than downvotes with no context. I have deployed many bots for fun to twitter and reddit. I could easily do the same on Instagram, Snap or Facebook. I could even make them look "Kinda real" with markov chain driven text input. Super, duper easy.
      - deleted 9y ago
        [deleted]
      - asdfasdf32r3 9y ago
        I suspect people are downvoting because it's easier than getting into a discussion with someone whose tone doesn't convey a willingness to have a constructive conversation. Your blithe comment has some merit on its surface -- I also "think" it seems trivial to do account fraud at a large scale -- but it pattern matches against the "I can build Stack Overflow in a weekend" mode. I can only guess, but I imagine the difficulty factor going from 500 to 1 million bots is much greater than 200x higher. (As in, if there are 1,000,000 people right now on Earth who could do the former, I suspect there are way fewer than 1mm/500 for the latter.) There are undoubtedly bot networks that operate (although we have no idea for how long), at a scale that would likely surprise me. However, even that doesn't make the data useless (especially when frequently cited against a previous measurement). Finally, your non-sequitur about markets being controlled by HFT bots hit a number of negative heuristics in my brain.
      - deleted 9y ago
        [deleted]
- ac29 9y ago
  >Facebook has 18 percent increase year over year. They have ~2B users. That's nearly 2/3 of people on the planet with Internet connections, according to estimates by the ITU (approx 3B internet users by the end of 2016) [0]. Even if I believed that user figure, which I dont, there is no way Facebook can grow at the same rate for much longer. [0] http://www.itu.int/en/ITU-D/Statistics/Documents/facts/ICTFactsFigures2016.pdf http://www.itu.int/en/ITU-D/Statistics/Documents/facts/ICTFa...
  - monkmartinez 9y ago
    You and I both. Facebook numbers have been a scam for a long time. I look at most social media as I look at multilevel marketing... it's all sunshine and rainbows until it simply collapses. There are no 100 year businesses in social.
    - askafriend 9y ago
      I think you're severely underestimating the scale and reach of Facebook. There's a reason it's a ~450B company. It really does have that many users. Even if a solid 20% of them are all fake accounts (which I don't think the percentage is that high), it's still a large part of the connected world. There's a reason Facebook is developing technology to bring the rest of the unconnected world online. It's because they know they'll reach a point where they'll have the whole connected market, and the only way forward is to grow the market to it's full potential. Don't let your hatred of the product or company blind your understanding of its scale and influence on the world (both positive and negative).
      - monkmartinez 9y ago
        It is not hate and you may well be right about the scale and reach of facebook right now. However, I think many people over-estimate the real utility of Facebook. That is, lives would not materially change for the better or worse if facebook fell off the face of the internet tomorrow, imo. Emotional reactions aside, Gajendra from Nepal and Tom from California would continue with life as they did before Facebook was available. The Yellow pages had a similar story not too long ago...
- nihonde 9y ago
  I keep trying to tell people that Snap can't grow to targets unless it opens Asia, and no one in Japan (at least in my first hand anecdotal experience) uses it or even knows what it is.
  - skinnymuch 9y ago
    Isn't Snow being used in Asia? Might Snapchat be too late for Asia?
thedarkginger 9y ago
Sluggish user growth probably doesn't look much better when Facebook's overt effort to clone their product seems to be working. Instagram Stories alone already outpaces Snap 200M to 166M. Looks like an uphill battle from here. http://www.thefader.com/2017/04/14/instagram-stories-more-popular-snapchat http://www.thefader.com/2017/04/14/instagram-stories-more-po...
- aaron-lebo 9y ago
  When you put it like that, you have to wonder how they have any chance at all, save some crazy pivot. From a consumer perspective, it's disappointing that Facebook controls itself and now this arena. It's gonna be hard to find innovation when purchasing and cloning are the way to do business. In some circles, having an Instagram is as expected as having Facebook, which makes abstaining difficult.
  - ericd 9y ago
    Maybe people will chase innovation somewhere more useful as a result. That'd be some nice silver lining.
  - pm90 9y ago
    Snapchat and Instagram definitely offer in somewhat similar spaces. All the semi-famous people I follow on instagram have their snapchat username right there in the profile.
    - dmix 9y ago
      People used to share Myspace and Facebook handle as well for a period of time... Snap used to have an advantage in terms of age group. I'm curious if this is still the case. Anecdotally I've heard from my partner that Instagram effectively duplicated a core feature of Snapchat to the point she no longer sees the point of Snapchat. But she always saw Snapchat as a side novelty, largely because she used Instagram well before Snapchat. But I also see this as an age group thing, Snapchat had the image of being popular with high school kids while Instagram had penetrated the university-30yr old category most effectively. So it's hard to say merely as an outside spectator. As well as being geographically limited in my perspective.
kooshball 9y ago
ARPU being down q4 to q1 makes sense since a lot of the ad revenue happens in q4. Similar trend with FB. http://www.cnbc.com/2017/05/03/facebook-average-revenue-per-user-arpu-q1-2017.html http://www.cnbc.com/2017/05/03/facebook-average-revenue-per-...
objclxt 9y ago
> A very key number here is revenue per user [...] this is down from $1.05 (14%) from what it reported for Q4 2016, before its IPO. I disagree a little with Bloomberg here, the numbers are bad (active users isn't great), but given the same number of users you'd expect advertising revenue (which is what they're driven by) to be down Q1 vs Q4. Ad budgets and spending is cyclical and seasonal, far more money is thrown at the wall during the holiday period than after.
- monkmartinez 9y ago
  I have snapchat on my phone, not because I use it... my daughter likes to make funny faces. She does NOT post. Am I counted as an active user?
  - robk 9y ago
    Opening counts as active.
  - lavezzi 9y ago
    She probably interacts with the sponsored filters and graphics if nothing else.
  - pm90 9y ago
    I have TV in my house, not because I watch any TV programs, but because I like BasketBall. Am I counted as an active user? Not trying to come across as snarky, but trying to setup an easy analogy :).
    - monkmartinez 9y ago
      If you watch the advertisements and can actually act on said advertisements all is well with the system. However, if you have zero spending power, no influence and miss the ads... all is not well. When are we going to say; What the hell is the point of this? Users "using" something doesn't make it profitable unless they are willing to pay you for it. Furthermore, advertising IS NOT working. Look at retail, malls AND name brands... Horrible performance for the bulk of recent memory.
vosper 9y ago
Is it surprising that revenue per user was down on Q4? Q4 is by far the biggest quarter for advertisers, and its typical to see agencies trying to get rid of their budgets before the end of the year. At the company I worked for there was always a Q1 slump.
korzun 9y ago
> I'm guessing the big issue is the miss on Daily active users. I'm guessing the big issue here is their losses doubled while only a small % of active users increased. Just a guess tho.
DeBraid 9y ago
EBITDA Margin looks pretty thin. Any time made up earnings are barely higher than sales it's a bad sign.
puranjay 9y ago
As someone who never has and likely will never use Snapchat (tried it once, didn't see the value), Snapchat has a major problem that Facebook doesn't: it can't attract older users. My parents, older relatives...everyone I know is on Facebook or Whatsapp. But they will never use Snapchat. Snapchat's users are only going to be younger. This makes them an attractive investment 10 years down the line, but not right now.
- mbarq 9y ago
  That's like saying the problem with water is that it makes you less thirsty. Snap's shtick is that it's not Facebook, that your parents aren't on it, that your creepy uncle's friend who came to the bbq last 4th of July is NOT there and that Snap is not going to geo-recommend you add him as a friend...that's the point and the main reason it got so popular so quick. How you monetize that? Dunno, but it will sure make your app popular.
- chrischen 9y ago
  Well good news for snapchat is that their current young users will eventually be old, and facebook's old users will eventually be dead.
cavisne 9y ago
How is DAU audited and enforced, is there a standard? Things like ebitda have a pretty standard audit procedure, there are bank statements and receipts that an auditor can check, and they can investigate variances. DAU doesn't seem to have a precise definition, and how do we know the method for collecting this metric is accurate? I've personally stuffed up this kind of collection before, and once you do it's very hard to backfill. Likewise Facebook has had several prominent advertising metric failures, how can we trust their DAU number?
- tacostakohashi 9y ago
  No standard, it's common for companies to make up their own (ridiculous) metrics defined however they want. At the end of the day it's just something that the board have defined and decided to use, and if they mess up the collection then it's embarrassing for them, they lose credibility, and investors will sell or install a new board. Even for things that have (more) precise definitions like profit or earnings, how does one know that the numbers are not deliberately or accidentally incorrect? You just have to trust the board, accountants, and auditors to do their job, and if you don't you shouldn't own the stock.
geppeto 9y ago
> Rule of thumb for non profitable tech companies.... If you are a company that isn't making a profit and you continually preach look at the users, look at the users. and then fail to even hit your target on that, you're going to get punished.....heavily. Employees get granted shares at any price, with the number of shares adjusted for the current price. Shares acquired before IPO can be sold for cash in 6-9 months. Shares in ongoing RSU packages can get sold in similar intervals but the main waiting game is for them to vest at all. Look at the dilution quarterly in the 10Qs, and look at the Form 3 and Form 4. Your rule of thumb is missing the point. Non profitable tech companies simply have to dangle a metrics carrot in front of investors as long as possible so they can keep dumping shares on investors as long as possible. This is what Twitter is doing, Zynga, King, Snapchat (and Facebook, Google, etc. these have stronger fundamentals though). It doesn't matter if the shares are $20 or $2, the employees get granted the same monetary value of shares in each RSU package and they sell them over time. Think of it like Dollar Cost Averaging for Dollars. The capital markets are heavily tilted in favor of the issuer, so you have to re-align the purpose of the metrics with that in mind. "Who is benefiting from this", the issuer. Only the executives get an EVEN BETTER parachute, if the company actually meets key metrics, but thats the only economic alignment we have and it comes from the board. Many other times, the company and employees borrow against their shares, and get margin called when the share price goes too low too fast. This circumstance is basically the only thing that has a material affect on these companies (aside from just running out of cash altogether)

tlogan 9y ago

I do not think that investors are concern about net loss - at least I'm not. I'm disappointed by anemic growth: Facebook has 18 percent increase year over year. They have ~2B users [1] This q Snapchat had growth of ~5% which will be about ~20% per year. But they are 10x smaller than Facebook. [1] Facebook 5/3/17 earning report

monkmartinez 9y ago
I saw Scott Hanselman spin up 1000 Azure instances in a demo today; How many bots can each instance support? Instant growth. How much social media activity/growth is not human?
- zeusk 9y ago
  > How much social media activity/growth is not human? As much as I agree with you, that kind of activity especially by first party or those related is called market manipulation. SEC and investors won't take lightly to it.
  - monkmartinez 9y ago
    And who will blow the whistle? One person could deploy a bot army to juice numbers. On a related note, the market itself is controlled by HFT bots. Don't rock the boat too much and no one is the wiser. Edit: Would love to some actual debate on this rather than downvotes with no context. I have deployed many bots for fun to twitter and reddit. I could easily do the same on Instagram, Snap or Facebook. I could even make them look "Kinda real" with markov chain driven text input. Super, duper easy.
    - deleted 9y ago
      [deleted]
    - asdfasdf32r3 9y ago
      I suspect people are downvoting because it's easier than getting into a discussion with someone whose tone doesn't convey a willingness to have a constructive conversation. Your blithe comment has some merit on its surface -- I also "think" it seems trivial to do account fraud at a large scale -- but it pattern matches against the "I can build Stack Overflow in a weekend" mode. I can only guess, but I imagine the difficulty factor going from 500 to 1 million bots is much greater than 200x higher. (As in, if there are 1,000,000 people right now on Earth who could do the former, I suspect there are way fewer than 1mm/500 for the latter.) There are undoubtedly bot networks that operate (although we have no idea for how long), at a scale that would likely surprise me. However, even that doesn't make the data useless (especially when frequently cited against a previous measurement). Finally, your non-sequitur about markets being controlled by HFT bots hit a number of negative heuristics in my brain.
    - deleted 9y ago
      [deleted]
ac29 9y ago
>Facebook has 18 percent increase year over year. They have ~2B users. That's nearly 2/3 of people on the planet with Internet connections, according to estimates by the ITU (approx 3B internet users by the end of 2016) [0]. Even if I believed that user figure, which I dont, there is no way Facebook can grow at the same rate for much longer. [0] http://www.itu.int/en/ITU-D/Statistics/Documents/facts/ICTFactsFigures2016.pdf http://www.itu.int/en/ITU-D/Statistics/Documents/facts/ICTFa...
- monkmartinez 9y ago
  You and I both. Facebook numbers have been a scam for a long time. I look at most social media as I look at multilevel marketing... it's all sunshine and rainbows until it simply collapses. There are no 100 year businesses in social.
  - askafriend 9y ago
    I think you're severely underestimating the scale and reach of Facebook. There's a reason it's a ~450B company. It really does have that many users. Even if a solid 20% of them are all fake accounts (which I don't think the percentage is that high), it's still a large part of the connected world. There's a reason Facebook is developing technology to bring the rest of the unconnected world online. It's because they know they'll reach a point where they'll have the whole connected market, and the only way forward is to grow the market to it's full potential. Don't let your hatred of the product or company blind your understanding of its scale and influence on the world (both positive and negative).
    - monkmartinez 9y ago
      It is not hate and you may well be right about the scale and reach of facebook right now. However, I think many people over-estimate the real utility of Facebook. That is, lives would not materially change for the better or worse if facebook fell off the face of the internet tomorrow, imo. Emotional reactions aside, Gajendra from Nepal and Tom from California would continue with life as they did before Facebook was available. The Yellow pages had a similar story not too long ago...
nihonde 9y ago
I keep trying to tell people that Snap can't grow to targets unless it opens Asia, and no one in Japan (at least in my first hand anecdotal experience) uses it or even knows what it is.
- skinnymuch 9y ago
  Isn't Snow being used in Asia? Might Snapchat be too late for Asia?

thedarkginger 9y ago

Sluggish user growth probably doesn't look much better when Facebook's overt effort to clone their product seems to be working. Instagram Stories alone already outpaces Snap 200M to 166M. Looks like an uphill battle from here. http://www.thefader.com/2017/04/14/instagram-stories-more-popular-snapchat http://www.thefader.com/2017/04/14/instagram-stories-more-po...

aaron-lebo 9y ago
When you put it like that, you have to wonder how they have any chance at all, save some crazy pivot. From a consumer perspective, it's disappointing that Facebook controls itself and now this arena. It's gonna be hard to find innovation when purchasing and cloning are the way to do business. In some circles, having an Instagram is as expected as having Facebook, which makes abstaining difficult.
- ericd 9y ago
  Maybe people will chase innovation somewhere more useful as a result. That'd be some nice silver lining.
- pm90 9y ago
  Snapchat and Instagram definitely offer in somewhat similar spaces. All the semi-famous people I follow on instagram have their snapchat username right there in the profile.
  - dmix 9y ago
    People used to share Myspace and Facebook handle as well for a period of time... Snap used to have an advantage in terms of age group. I'm curious if this is still the case. Anecdotally I've heard from my partner that Instagram effectively duplicated a core feature of Snapchat to the point she no longer sees the point of Snapchat. But she always saw Snapchat as a side novelty, largely because she used Instagram well before Snapchat. But I also see this as an age group thing, Snapchat had the image of being popular with high school kids while Instagram had penetrated the university-30yr old category most effectively. So it's hard to say merely as an outside spectator. As well as being geographically limited in my perspective.

kooshball 9y ago

ARPU being down q4 to q1 makes sense since a lot of the ad revenue happens in q4. Similar trend with FB. http://www.cnbc.com/2017/05/03/facebook-average-revenue-per-user-arpu-q1-2017.html http://www.cnbc.com/2017/05/03/facebook-average-revenue-per-...

objclxt 9y ago

> A very key number here is revenue per user [...] this is down from $1.05 (14%) from what it reported for Q4 2016, before its IPO. I disagree a little with Bloomberg here, the numbers are bad (active users isn't great), but given the same number of users you'd expect advertising revenue (which is what they're driven by) to be down Q1 vs Q4. Ad budgets and spending is cyclical and seasonal, far more money is thrown at the wall during the holiday period than after.

monkmartinez 9y ago
I have snapchat on my phone, not because I use it... my daughter likes to make funny faces. She does NOT post. Am I counted as an active user?
- robk 9y ago
  Opening counts as active.
- lavezzi 9y ago
  She probably interacts with the sponsored filters and graphics if nothing else.
- pm90 9y ago
  I have TV in my house, not because I watch any TV programs, but because I like BasketBall. Am I counted as an active user? Not trying to come across as snarky, but trying to setup an easy analogy :).
  - monkmartinez 9y ago
    If you watch the advertisements and can actually act on said advertisements all is well with the system. However, if you have zero spending power, no influence and miss the ads... all is not well. When are we going to say; What the hell is the point of this? Users "using" something doesn't make it profitable unless they are willing to pay you for it. Furthermore, advertising IS NOT working. Look at retail, malls AND name brands... Horrible performance for the bulk of recent memory.

vosper 9y ago

Is it surprising that revenue per user was down on Q4? Q4 is by far the biggest quarter for advertisers, and its typical to see agencies trying to get rid of their budgets before the end of the year. At the company I worked for there was always a Q1 slump.

korzun 9y ago

> I'm guessing the big issue is the miss on Daily active users. I'm guessing the big issue here is their losses doubled while only a small % of active users increased. Just a guess tho.

DeBraid 9y ago

EBITDA Margin looks pretty thin. Any time made up earnings are barely higher than sales it's a bad sign.

puranjay 9y ago

As someone who never has and likely will never use Snapchat (tried it once, didn't see the value), Snapchat has a major problem that Facebook doesn't: it can't attract older users. My parents, older relatives...everyone I know is on Facebook or Whatsapp. But they will never use Snapchat. Snapchat's users are only going to be younger. This makes them an attractive investment 10 years down the line, but not right now.

mbarq 9y ago
That's like saying the problem with water is that it makes you less thirsty. Snap's shtick is that it's not Facebook, that your parents aren't on it, that your creepy uncle's friend who came to the bbq last 4th of July is NOT there and that Snap is not going to geo-recommend you add him as a friend...that's the point and the main reason it got so popular so quick. How you monetize that? Dunno, but it will sure make your app popular.
chrischen 9y ago
Well good news for snapchat is that their current young users will eventually be old, and facebook's old users will eventually be dead.

cavisne 9y ago

How is DAU audited and enforced, is there a standard? Things like ebitda have a pretty standard audit procedure, there are bank statements and receipts that an auditor can check, and they can investigate variances. DAU doesn't seem to have a precise definition, and how do we know the method for collecting this metric is accurate? I've personally stuffed up this kind of collection before, and once you do it's very hard to backfill. Likewise Facebook has had several prominent advertising metric failures, how can we trust their DAU number?

tacostakohashi 9y ago
No standard, it's common for companies to make up their own (ridiculous) metrics defined however they want. At the end of the day it's just something that the board have defined and decided to use, and if they mess up the collection then it's embarrassing for them, they lose credibility, and investors will sell or install a new board. Even for things that have (more) precise definitions like profit or earnings, how does one know that the numbers are not deliberately or accidentally incorrect? You just have to trust the board, accountants, and auditors to do their job, and if you don't you shouldn't own the stock.

geppeto 9y ago

> Rule of thumb for non profitable tech companies.... If you are a company that isn't making a profit and you continually preach look at the users, look at the users. and then fail to even hit your target on that, you're going to get punished.....heavily. Employees get granted shares at any price, with the number of shares adjusted for the current price. Shares acquired before IPO can be sold for cash in 6-9 months. Shares in ongoing RSU packages can get sold in similar intervals but the main waiting game is for them to vest at all. Look at the dilution quarterly in the 10Qs, and look at the Form 3 and Form 4. Your rule of thumb is missing the point. Non profitable tech companies simply have to dangle a metrics carrot in front of investors as long as possible so they can keep dumping shares on investors as long as possible. This is what Twitter is doing, Zynga, King, Snapchat (and Facebook, Google, etc. these have stronger fundamentals though). It doesn't matter if the shares are $20 or $2, the employees get granted the same monetary value of shares in each RSU package and they sell them over time. Think of it like Dollar Cost Averaging for Dollars. The capital markets are heavily tilted in favor of the issuer, so you have to re-align the purpose of the metrics with that in mind. "Who is benefiting from this", the issuer. Only the executives get an EVEN BETTER parachute, if the company actually meets key metrics, but thats the only economic alignment we have and it comes from the board. Many other times, the company and employees borrow against their shares, and get margin called when the share price goes too low too fast. This circumstance is basically the only thing that has a material affect on these companies (aside from just running out of cash altogether)