Snap Inc NYSE: SNAP Stock Plummets 19.53% on Slowing User Growth

Snap Inc NYSE: SNAP stock plummeted as much as 23% on Thursday morning before a slight recovery by mid-morning trade. The popular “camera company” and owner of the Snapchat app showed slowing user growth and revenue amid rising competition.

Snap Inc NYSE: SNAP

Snap announced the addition of 7 million daily active users, which wasn’t enough for the company to quiet rumors of Facebook (FB) eating into the company’s market share.

Snap Inc NYSE: SNAP‘s number of daily active users is up 36.1% to 166 million on a year-over-year basis. The growth is still lower than the 47.7% user increase in the fourth quarter, or the 62.8% growth in the third quarter of last year.

The company’s average revenue per user rose from $0.33 a year prior to $0.90 in the most current quarter. The revenue is down from $1.05 per user in the final quarter of 2016.

Investors question the company’s ability to monetize their product among millennials. The company’s main competition is Facebook’s Instagram product, which has 200 million people using the company’s “Stories” product. The “Stories” feature is a main competitor to Snapchat.

WhatsApp also added their own competitor to SnapChat called “WhatsApp Status.” The app’s feature has 175 million active users. Instagram Stories and WhatsApp Status are both direct mimicking apps to SnapChat. Videos and photos disappear in 24 hours or less.

Snap Inc NYSE: SNAP CEO Facing Backlash

 

Snap’s CEO Evan Spiegel is facing a backlash, as his massive IPO bonus accounts for a large portion of the $2.2 billion net loss. Stock-based compensation accounts for $2 billion in losses, with IPO-related stock based compensation coming in at $1.7 billion.

Spiegel was given 3% of the company’s outstanding shares, or 37.4 million shares replacing the 16 million he sold during the IPO. The value of the bonus was $800 million. The shares will be delivered in quarterly installments to the CEO over the next three years, but Snap has recognized the costs now. The shares are vested immediately.