Snap's first earnings to shed light on battle with Facebook, Twitter

Wed May 10, 2017 9:22pm EDT
 
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By Angela Moon and Saqib Iqbal Ahmed

NEW YORK (Reuters) - Snap Inc (SNAP.N: Quote) has many similarities with archrivals Facebook Inc (FB.O: Quote) and Twitter Inc (TWTR.N: Quote), but shareholders are eager to avoid one in particular when the social media company reports earnings on Wednesday for the first time since its initial public offering: a plunging stock price.

Investors delivered a stern message of disappointment to Facebook and Twitter when they posted debut quarterly scorecards following their IPOs. Twitter shares cratered 24 percent the following day, while Facebook's tumbled 11 percent, drops that stand to this day as the biggest one-day losses for both.

While Facebook's shares recovered from the drubbing within two quarters and trade at nearly four times their $38 IPO price, Twitter’s shares never completely regained lost ground and currently trade down nearly a third from their $26 IPO price.

The options market is already positioned for a double-digit swing in Snap shares by the end of this week.

One key to Snap, the owner of the wildly popular Snapchat messaging app, dodging a similar reception from the market rests on whether its user growth and engagement measures meet investors' expectations as Facebook aggressively copies its most successful features.

The earnings report and subsequent conference call after the bell "will be make it or break it" for Snap, said Eric Kim, co-founder and managing partner at Goodwater Capital.

The stock, which started trading in March in the largest tech IPO since Facebook's in 2012, jumped 44 percent on its debut, but has since fallen 5.5 percent from that day's closing price. On Wednesday, the shares were down 1.11 percent to $23.06.

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FILE PHOTO: The logo of messaging app Snapchat is seen at a booth at TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson