Daily Tech Snippet: Thursday, May 11

• Snap shares plummet as investors mark down first earnings report: Shares tumbled 23 percent in after-hours trading to wipe some $6 billion from Snap's market value, a humbling reversal for the company after its red-hot March initial public offering, which was the biggest for a U.S. tech company since Facebook Inc in 2012. The stock fell to $17.66, only just above its IPO price of $17.Snap's revenue jumped nearly four-fold year-over-year to $149.6 million but fell short of the average analyst forecast of $158 million, according to Thomson Reuters I/B/E/S. Revenue was also down from the fourth quarter of 2016, a seasonally stronger period for ad sales, when it was $166 million. Revenue was "a relatively disappointing number," Pivotal Research analyst Brian Wieser said. "To their credit," he added, "they did guide towards a number that would be lower, which it was." Average revenue per user was 90 cents in the first quarter, Snap said, up from 33 cents the same quarter a year earlier but below the $1.05 per user in the fourth quarter of 2016. Snap's net loss widened to $2.21 billion, or $2.31 per share, in the first quarter, from $104.6 million, or 14 cents per share, due to stock-based compensation related to the IPO.Although the figure of $2 billion in total stock-based compensation was known ahead of time, investors were surprised to see all of it show up in a single quarter rather than spread out over time, said Eric Kim, managing partner at Goodwater Capital. "It is an eye-popping number for sure," he said.

• As Department Stores Close, Stitch Fix Expands Online: The retail landscape is littered with the casualties of changing consumer behavior. Shoppers are bargain hunting online, department stores are struggling, and once-mainstay brands are closing out permanently. Then there is Stitch Fix, a mail-order clothing service that offers customers little choice in what garments they receive, and shies away from discounts for brand name dresses, pants and accessories. Despite a business model that seems to defy conventional wisdom, Stitch Fix continues to grow. For the fiscal year that ended last July, the company recorded sales of $730 million. It has been profitable since 2014 and has raised just $42 million from outside investors, a relatively modest sum for a high-flying Silicon Valley start-up. Stitch Fix’s pitch is straightforward enough: Trust the company to pick out your tops, bottoms, shoes or accessories for you. When customers sign up, they fill out an extensive form detailing style preferences, clothing needs and price points. The start-up’s algorithms then churn out a set of potential choices, which one of its 3,400 stylists — most of them part time — then tailors to the individual customer before sending out five items in a package. Anything a customer does not want can be returned free of charge, and customers receive a 25 percent discount when they buy everything in the box. Stitch Fix is not the first company to try this business model. Similar start-ups, from clothing rival Trunk Club to the cosmetics specialist Birchbox, have found a market mailing consumers a grab bag of items and offering free returns for anything unwanted. But many such start-ups have had trouble keeping costs down, and customers around. Nordstrom, which bought Trunk Club in 2014 for a reported $350 million, wrote down nearly $200 million from the business’ value last year.