Snap Inc, the company which owns popular smartphone application Snapchat, will report its first earnings report today. Snapchat is an application which allows users to send photos and videos to their friends, which must be watched within a given time limit. The app also used artificial intelligence to amend images and edit videos in real time.
The Snap Inc report is highly anticipated by tech enthusiasts and investors alike, who are attempting to avoid a plummeting stock price. The company has faced increasing competition as Facebook and Instagram have introduced “Story” features, which allow the apps to work in a similar way to Snapchat.
Investors expressed their disappointment to Twitter and Facebook after they published their first quarterly scorecards after their IPOs. Twitter saw its shares drop by 24% the next day, and Facebook didn’t fare much better with their stock prices dropping by 11%. Both these instances stand as the the largest one-day losses for each company.
If Snap is to avoid a similar drop in stock prices, it must show significant user growth and improved engagement. As Facebook builds on its app platforms to replicate the features offered by Snapchat, the company faces increasing challenges to remain relevant in the app market.
The earnings report, according to co-founder and managing partner of Goodwater Capital, Eric Kim, will be a “make or break” deal for the company. Wall Street’s Thomas Reuters currently expects the company to report a quarterly loss of 19 cents for every share. Other analysts have predicted revenue of around $158 million, which is around four times the size of its income from last year. It is also 5% lower than the revenue in the fourth quarter of 2016, which was $165.7 million.
Snap Inc has found it easier to raise money than it has making it. The company has reported significant losses, despite its initial stock sale of $3.9 billion in March this year. This was the largest IPO in the United States since 2014.
This isn’t the first time that analysts have predicted trouble for Snap. Last year the company’s net and operating losses were greater than its sales, signaling that the firm is quickly burning through its funding in an effort to keep innovating. The company has been delivering new features for consumers, and investors have seen a substantial revenue growth. Snapchat now uses ads in its app, which have been seen by 150 million users, which have given the company a well-needed boost.
The report later today will reveal whether Facebook’s attempt to replicate Snapchat has been successful. Snap’s shares increased by 44% on their first day on the exchange in March. A share quickly rose to $24, but since then its stock has closed at a low figure for every day in April and May. As of Wednesday morning, Snap’s shares had also decreased by 1%. Snap could prove to still have an edge over Facebook, with a user base that can visit anywhere up to 18 times per day.