Snap, the parent company for Snapchat, the message app went public during March of this year, and has been closely watched as a barometer for Wall Street and Silicon Valley.
The tech world has been scrutinizing Snap as a bellwether for smaller companies in social media to determine if they can compete with the giants in the industry such as Facebook.
Wall Street has used Snap as a gauge to whether investors will be willing to embrace other tech companies that are unprofitable if they were to go public.
On both fronts, Snap has failed to deliver. Over the last couple of months, the company, which at one time was buzzing along, has been faced with a multitude of issues.
Instagram, the photo-sharing app owned by Facebook, as well as other apps by Facebook that have copied the main features of Snapchat have grown much quicker than has Snapchat.
During May, Snap posted earnings that disappointed. Those were the first earnings as a public entity. Since then, its stock has plummeted below its price for the public offering of $17 per share.
One strategist on Wall Street said on Thursday that Snap will face a year that is make or break very soon and it will either realize the full potential many believe it has through the delivery of growth in users, or it will be the industry’s next Twitter.
The numbers posted by Snap on Thursday did not appear to change its current trajectory as earnings missed expectations on Wall Street.
The company posted 36 cents per share loss, versus expectations of a loss of 33 cents per share.
Revenue increased ending the quarter at $181.7 million, but came up short of expectations of $185.7 million. Snap posted a quarterly loss that was wider than one year ago, ending the quarter at $443.1 million, up from last year’s $115.9 million.
User growth did little to impress. The user base increased 21% over the last year to reach 173 million, which is slower than what Wall Street was expecting.
However, most of the growth was in North America, which showed the company is able to continue expanding in highly lucrative markets for advertising like the U.S.
The average revenue earned per user was up 109% over the past year to $1.05.
Shares of Snap were down 16% in trading after hours following the quarterly results being released.