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Snap Loses $2.2 Billion in Q1, Stock Plunges 19 Percent

Disappearing message social network reports huge losses without enough user growth to overcome them

Snapchat parent Snap Inc. hasn’t exactly had a banner run in the two-plus months since its IPO, but all eyes were on its first earnings release. And on Wednesday, Snap sent its investors a tough message.

After markets closed, Snap reported revenue of $150 million and a whopping loss of $2.31 a share — $2.2 billion — for the three months ended March 31. That compares with the $39 million in revenue and loss of 14 cents a share the company reported for the same period a year earlier. Analysts had estimated the company would report revenue of $158 million and a loss of 19 cents a share on average.

That massive net loss sent Snap’s stock down 19 percent in after-hours trading.

But Wall Street wasn’t expecting Snap to make money — even if it didn’t foresee that type of loss. The company announced an increase of 8 million daily active users from the previous quarter on Snapchat, an increase of 5 percent. Daily active users jumped 36 percent from the same quarter the previous year. That growth wasn’t overly impressive, but it could alleviate some concerns over slowing user growth following the release of Instagram Stories last year from Snap’s primary competitor, social media colossus Facebook — although Instagram Stories continues to add users at a far more rapid clip than Snapchat.

In the company’s IPO filing, Snap pitched itself as a TV replacement for younger demographics who simply aren’t tuning into linear television anymore — and are a valuable audience for advertisers. The company claimed 36 percent of its daily active users are between 18 and 24, with another 22 percent between 13 and 17, giving it the elusive cool factor so many brands want to partner with.

In March, Snap partnered with Hollywood fixture MGM to develop Snapchat Shows, its first content partnership with a full-fledged studio. Snapchat Shows are original, 4-5 minute, scripted or unscripted stand-alone programs shot vertically with Snapchat’s preferred orientation in mind. They include both old and new IP and cover a variety of genres, from documentaries to reality TV to dramas.

Snap’s was one of the most anticipated tech IPOs in years, but the stock has languished since. It closed just below $23 a share Wednesday, down more than 1 percent on the day before falling off a cliff after the earnings report.

The company will hold a conference call at 4:30 p.m. ET to discuss the earnings. CEO Evan Spiegel did not provide a quote in the company’s release.