I do not believe anyone could be surprised that Snapchat’s ($SNAP) first earnings report since its IPO was a complete dumpster fire. The earnings for the quarter… actually, let’s be honest. The loss for the quarter was around $2.21 billion, although the company claims most of it was $1.9 billion in “compensation-related expenses” related to the IPO, in which Snapchat CEO received a $750 million bonus for taking the company public.
Snapchat missed revenue by about $10 million, or 6%, although their revenue grew 286% year over year. Daily active users missed expectations by 2 million users, meaning 2 million of you are not sending enough unsolicited nudes on a regular basis. By comparison, Instagram, Snapchat’s biggest competitor by far, released Instagram stories in late 2016 and already has 200 million daily active users. Facebook, which offered $3 billion for Snapchat several years ago and received a middle finger as a counter offer, touts 2 billion active users in total.
Some other financially irrelevant numbers include 3 billion snaps/dick pics sent in the first quarter, up from 2.5 billion snaps in the previous quarter. Snapchat users are spending 30 minutes a day on the app on average, while Instagram users only average 15 minutes per day on the app. Cool numbers, but financially irrelevant if they aren’t clicking on or looking at ads.
After reporting earnings, the stock dropped 26% in after hours trading to $17.19 on the crappy earnings report. Snapchat CEO owns about 14% of the outstanding shares, meaning this tank lost him about $1 billion in equity value, yet cash-wise he seems to be raking it in anyways. Even if Snapchat is a penny stock by the time the lockup period ends and Snapchat CEO sells off his shares, if he decides to do so, he’s going to be a billionaire by sucking money out of the company in terms of cash compensation. Convenient.
In short, if you are bored by the numbers, Snapchat’s CEO found a way to become a billionaire without selling all his shares. If you count his capital gain from the IPO and his IPO bonus, not even counting his salary, he eclipsed a billion dollars gross. It will be substantially less in the short term due to taxes, but I’m sure he can milk more out of the company. In other words, the shit head won, and he’s taking the Marissa Mayer route and enriching himself via salary and bonuses off investor money while running a company into the ground. Pretty sweet deal.
So, that said, let’s see how Snapchat CEO is handling his first earnings report.
CEO: *Walks in humming Bing Crosby’s “We’re in the Money”*
Tammy: Sir, sir. Sir!
CEO: Tammy, not now.
Tammy: Sir, the phone has been ringing off the hook with calls from our largest shareholders threatening to dump the stock if, quote, “That snotty little punk doesn’t get his shit together.”
CEO: I’m sorry, I’m having trouble hearing you over the sound of the $1 billion I made off this IPO.
Tammy: Sir, if they dump the stock…
CEO: Tammy, I literally don’t care. Shareholders and banks will prop up the company while I suck bonuses out of this company like I’m Monica Lewinsky in the Oval Office. They can’t do anything about it.
Tammy: Can’t they sue you?
CEO: *Pauses* You’re a real fucking buzzkill Tammy, you know that?
CEO: So. Ralph. Rough earnings report, huh?
Ralph: Yes sir, but as I recommended it’s better to claim all IPO-related compensation expenses up front so our earnings reports look better closer to the end of the lockup period. It’s also a good excuse for a $2.2 billion loss.
CEO: Ralph, you are a goddamn genius, you know that? That’s why I haven’t fired you yet.
Ralph: Thanks, I guess. *Gulps nervously* I will say, the shareholders won’t be happy about your large salary and bonuses. They could make a major civil case if the numbers start raising eyebrows and the losses start growing at a substantial rate. Our stock price already took a big hit.
CEO: Let those attorneys send out their class action suit letters, it happens literally every day. Try to blend in my compensation with total salaries so it just looks like we’re giving raises. They won’t be able to touch my money where it’s going, anyways.
Ralph: And…where is that, exactly?
CEO: Fuck you, Ralph.
CEO: Jim, good job growing sales.
Jim: Well thanks there, boss. I’m doing my best.
CEO: We still came up short, though. So, please, enlighten me why the fuck we missed on revenue.
Jim: I can’t control what the analysts’ consensus will be. Our sales almost tripled year over year.
CEO: Stop being a whiny bitch and listen to me. We need to keep revenue up so we don’t raise any eyebrows among the big shareholders, especially since I don’t give them voting rights. I don’t care how much it costs you to keep growing revenue, you have a blank check from all the Millennial retirement account IPO funds we raised.
Jim: Thanks, I’ll do my best. It’ll be tough without substantial daily user growth, though.
CEO: No shit, Sherlock. Don’t worry, I’m going to ream Fran over that.
CEO: Jim, shut up. Just get back to whatever you were doing, I’m going into my office to jerk it to my bank account.
CEO: Bob, how are things going over here?
Bob: Pretty great, actually. We haven’t encountered any bugs in a month.
CEO: Great, huh?
Bob: Of course, sir.
CEO: Snap volume still growing? Q1 2017 had half a million more snaps than Q4 2016.
Bob: Yes sir. There’s been a major uptick in dick pics sent. I’ve seen a lot of dicks lately.
CEO: Gross. Just keep doing your damn job.
CEO: FRAN! Why did we miss daily active users by 2 million?!
Fran: I…I don’t know sir. It seems like Instagram stories is siphoning off quite a few users.
CEO: FRAN! THAT’S NOT WHAT I WANT TO HEAR. I WILL NOT LET FUCKERBERG STEAL MY USERS, DO YOU HEAR ME?
Fran: Yes sir, I’m doing my best. I’m trying to keep us as a featured app on iTunes, Android store, and Tech Crunch. I’m really pushing our augmented reality filters to the media but it’s costing money to get exclusives.
CEO: Fran. Fran Fran Fran Fran Fran. I don’t care how much you spend. I can’t be letting Zuckerberg beat me while he’s doing his stupid everyman tour trying to convince poor people to support his political run. Get up those numbers, I want 200 million daily active users by our next earnings report or God help you.
CEO: Hey Steve, how’s it hanging? Short, shriveled, and a little to the left?
Steve: You used that joke last time, sir.
CEO: Shut up. Now, tell me, how are the new augmented reality filters coming along?
Steve: Good, sir, but I wanted to talk to you about ad positioning so we can earn more revenue per user instead of relying on user growth…
CEO: Steve, don’t talk back to me. I have other people handling the business stuff. What new filters do you have for me?
Steve: Well I have a Putin hockey filter. If you open your mouth it zooms out and looks like you’re hitting a puck with Comey’s face on it.
CEO: Okay, I’ll admit, that’s pretty fucking funny. What else?
Steve: There’s a Tinder left swipe filter and a Game of Thrones crown and iron throne filter.
CEO: Great, great, excellent those are all good. What about the dog crapping on Jim Cramer’s head filter?
Steve: Sir, that just seemed inappropriate.
CEO: I don’t care what seems appropriate. He thinks I should be more humble? I’ll show him fucking humble. Make sure you throw in one of his Mad Money sound effects, too. .