Reuters reported that Snapchat shares dropped 23 percent in after-hours trading.
The stock fell to $17.66, just above its IPO price of $17.
Several analysts said investors shouldn't read too deeply into Snap's first earnings report. He added that failing to live up expectations, let alone exceed them, caused disappointment.
The performance echoed slides in Facebook and Twitter after they posted debut scorecards following their IPOs. "There's a lot of this thing in our industry called "growth hacking" where you send a lot of push notifications to users or you try to get them to do things that might be unnatural, or something like that", Spiegel said during the earnings call.
He also did not shy away from one query that allowed him to take a feisty jab at Facebook. "Just because Yahoo has a search box doesn't make it Google".
Snap's year-over-year growth too remains on the decline, being at 36 percent compared to the 48 percent it was in Q4. The 20 percent selloff suggests Snap's Wall Street IPO underwriters may have nailed the company's valuation.
After closing the day at $22.98, Snap's shares tanked 21.5% in overnight trading and continued to fall during trading on the New York Stock Exchange (NYSE) on Thursday, closing at $18.05, a loss in value of almost $6bn, according to The Guardian.
As a result, Spiegel and fellow co-founder Bobby Murphy - who are the biggest shareholders in Snap - each saw more than $1 billion of their wealth disappear.
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"The 7 million daily active users net-adds were not strong enough to disprove the "Facebook is crushing Snapchat" thesis", which we think will persist for a while", Barclays analyst Ross Sandler wrote in a client note.
Furthermore, the company's daily active users (DAU) and average revenue per user (ARPU) witnessed year-over-year improvement.
However, it's worth pointing out that a disproportionate amount of those costs is directly tied to one person: CEO Evan Spiegel. But Wall Street has been making some other comparisons.
"Snap presents investors with the opportunity to invest in the company behind an innovative, large-scale, and distinctively young-skewing platform", Brian Wieser, an analyst at Pivotal Research, told Bloomberg when it floated. The company had revenue of $149.60 million for the quarter, compared to the consensus estimate of $158.32 million. It came 60 cents for the quarter, which is higher than the year-ago quarter figure of 50 cents, but lower than the previous quarter figure of 72 cents.
"It is an eye-popping number for sure", he said.
Snap's challenges are hard because Facebook is introducing features based on Snapchat for its main social network as well as its Instagram platform.
Investors have also voiced concern amid competitor's tendency to copy some of Snap's flagship features, including its Stories concept. As of March, the company said it had about 161 million daily users. "You are going to introduce your call the next time". Ross Gerber of Gerber Kawasaki tweeted: "Snap user growth is nearly zero".
Fast forward less than three months, and Snapchat still doesn't want people to focus on user growth, which increased by 8 million people from the end of December to March 31.
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