When Snap listed its shares in March, the floor of the New York Stock Exchange was festooned in the social media company's signature yellow. Family members of Snap executives posed for photographs; some wore the company's video-recording Spectacles. And as Snap's two 20-something founders rang the opening bell, the crowd - including one of the founder's fathers and a supermodel fiancée applauded.

Yet just two months into its life as a public company, Snap's celebration may already be ending.

On Wednesday, Snap, the parent of the messaging app Snapchat, reported earnings that missed Wall Street expectations in almost every regard. Not only did Snap record a $US2.2 billion loss for the first quarter, its revenue was lighter than expected and the company disclosed that its user growth was decelerating sharply. Investors punished the company, sending its stock down more than 25 per cent in after-hours trading.

The results were a bumpy start for Snap after its much-hyped initial public offering, the biggest for a technology company in recent years. Snap's earnings illustrate how difficult it is for smaller social media companies to compete in the age of Facebook, the social network run by Mark Zuckerberg, which has sucked up more than 2 billion people worldwide and has made the size of its network a primary selling point.

For Snap, the challenge is tricky because the company approaches social networking differently. Instead of emphasising the number of people users know, Snapchat focuses on fewer connections and the quality of friends on the network. Yet with Wall Street and others using Facebook as a benchmark, the comparisons for Snap are tough. For now, Snap looks more like Twitter, the social media service that has had rough times because of anemic user growth.

Snap's weak results so soon after its IPO appeared to shock many - even though it had warned investors that owning Snap stock would not be an easy path to riches. In its IPO filing, Snap had highlighted huge losses that were not expected to end and slowing growth. Snap's executives had cautioned that results would be "lumpy and unpredictable."

Evan Spiegel, Snap's chief executive, had said, "One of the challenges we've encountered over time is explaining to people why bigger isn't better."

"They told us all of this," Brian Wieser, an analyst at Pivotal Research, said of Snap's executives. "With Snap in particular, there's always been a greater fool element - a lot of people bought it because they thought someone else would pay more for it. That's impossible to ignore."

Snap's $2.2 billion loss for the first quarter, which included a $2 billion expense related to stock compensation, was far wider than its $104 million loss a year ago. Revenue was $149.6 million, almost four times as much as a year ago, but fell short of Wall Street estimates of $158.6 million.

And while Snap said its number of daily users increased 36 per cent year-on-year, to 166 million in the first quarter, that was down from 53 per cent growth in the first quarter of 2016.

Snap's results were partly viewed as a referendum on whether it would be able to fend off Facebook, which wanted to buy Snap in 2013 and is trying to crush the young company. For years, Snap, which is based in Venice, California, and outside the orbit of Silicon Valley companies, had turned certain social media norms on its head by pioneering features like disappearing messages and add-ons like lenses and filters.

In the last year, Facebook has copied some of Snapchat's features and inserted them into its apps, including Instagram and the messaging app WhatsApp. Given Facebook's immense size, the moves have created concern that Snapchat would not seem sufficiently different and attractive to users.