Snapchat slumps as losses hit £1.7bn

...and shares sink 20pc in after-hours bloodbath

PHOTO- messaging firm snapchat plunged into the red last night amid fresh fears over when it will turn a profit.

in its maiden set of results since joining the new York stock market in march, parent company snap reported first-quarter losses of £1.7bn, having made sales of just £115m.

The average revenue generated by each user came in at 70p, down heavily on the 81p it made per customer in the fourth quarter of 2016.

The results, published after the stock market closed last night, sparked a selloff in after-hours trading.

snap, which was $22.98, had dropped almost 20pc as the mail went to press.

The figures fuelled speculation over the health of the company just two months after australian supermodel miranda Kerr ( pictured), fiancee of snapchat founder evan spiegel, 26, appeared on the floor of the new York stock exchange to mark its debut as a public company, then valued at £24bn.

investors have since endured a rollercoaster ride, and while shares are above its float price of $17 they are well below a peak of $29.44. However, if the after-hours sell-off continues, they could be set to open below $17 in the morning.

snapchat, which allows users to send pictures and other messages that vanish in seconds, was set up in 2011. The Californian company is valued at £ 21bn despite never making a profit; it lost £400m last year.

its results show daily users had hit 166m in the first few months of 2017, up from 122m in the same period last year. This compares to 400m who use instagram a day and 1.2bn who use Facebook. Twitter is thought to have around 140m daily users.

City veterans have criticised snap for issuing shares with no voting power, which means that investors earn dividends but have no say in how it is run. The boss of one of Britain’s biggest investment firms described the situation as ‘nuts’ and said buying shares in snap was like handing someone an ‘unsecured loan’ that may not be repaid.

Legal & general investment management is now demanding a crackdown on tech firms that think they can escape scrutiny.

‘They’re playing by their own rules,’ said corporate governance director sacha sadan. He believes snap and others like it should be kept off indices – or else he will be buying stock over which he has no control and investors will suffer. ‘We think this company and anyone like it can’t be allowed in.’