Snapchat’s co-founders have lost a combined $2 billion after a surprisingly underwhelming first quarter. Evan Spiegel and Bobby Murphy have both lost $1 billion after the social media app recorded disappointing growth in the first three months of the year.
In its first report since floating on the stock exchange, Snap recorded net losses of $2.2 billion, largely due to costs associated with the IPO earlier this year. Revenue rose 286% to almost $150 million, but that is still some way off the $160 million forecast. Subsequently, shares in Snap have plummeted, tumbling more than 20% in after-hours trading in New York.
A large reason for the underachievement is due to the number of users slowing down. In the first quarter, Snap said its daily active users rose by just 5% compared to the last quarter of 2016, implying that Snapchat may have reached its ceiling.
Another factor which could be driving users away from Snapchat, is the fact that Facebook and Instagram have copied numerous features from Snapchat over the past 12 months. However Spiegel refused to blame competitors for dampening his profits, saying that ‘that’s business’. “If you want to be a creative company, you have got to be comfortable with and enjoy the fact that people copy your products if you make great stuff,” Spiegel said. “Just because Yahoo! has a search box doesn’t mean they’re Google.”
He also noted that Snapchat doesn’t resort to ‘growth hacking’ like some other apps (perhaps a thinly veiled dig at Facebook, which often connects user’s phone contacts on its social network).