This column originally appeared on May 10 on Real Money, our premium site for active traders. Click here to get great columns like this.

Given Facebook's (FB)  all-out push to bake Snapchat Stories clones and other Snapchat features into its four biggest apps, it makes sense that many eyes were on Snap Inc's (SNAP) daily active user (DAU) count going into its first earnings report as a public company. It was especially of interest because Facebook had already disclosed that two of its Stories clones already had more DAUs than Snapchat claimed as of the end of 2016.

But while Snap's first-quarter DAU count disappointed a little, it's by no means the only reason for the ephemeral messaging and communications app's post-earnings bludgeoning. There also is the company's disappointing top-line performance, and the way that it heightens existing fears about how well it can monetize its user base in a very competitive online ad landscape.

Snap reported Q1 revenue of $149.6 million (up 286% annually) and GAAP EPS of negative $2.31. Though analysts tend to be cautious with sales estimates for a newly public company, the former missed a $158 million consensus. The latter missed a negative $1.92 consensus. As expected, no formal guidance was provided.

Shares fell 23.1% in after-hours trading to $17.68. They've made new post-IPO lows, and are within striking distance of March's $17 IPO price.

Snap's losses were inflated in Q1 by $2 billion in IPO-related stock compensation expenses, and will be far lower in the coming quarters. Going into earnings, the Q2 EPS consensus was at negative $0.18. But with the company claiming $1.3 billion in unrecognized restricted stock unit (RSU) expenses that it expects to recognize over the next three years, stock compensation costs will remain substantial.

But even if one excludes stock compensation, Snap's costs and expenses totaled $350 million, up 155% annually and more than twice reported revenue. Cloud infrastructure expenses contributed: Snap's hosting costs, though down 12% sequentially thanks to new 5-year deals with Alphabet/Google (GOOGL) and Amazon.com (AMZN) , still totaled $99 million, as did aggressive hiring, particularly in R&D, where headcount rose 27% sequentially to 2,360.

DAUs totaled 166 million, up 8 million from Q4 but below a 168 million consensus. Though sequential DAU growth was better than Q4's 5 million, it was still below Q3's 10 million, never mind Q2's 21 million. Instagram Stories, which launched in August, had 200 million DAUs as of April, while WhatsApp Status, which launched only in February, now has over 175 million DAUs.

Notably, only Snapchat's DAU base grew by 1 million outside of North America and Europe, to 40 million. This is despite the fact that Snap's overseas base features a disproportionate number of Android users, and CEO Evan Spiegel reported that Snap significantly improved its Android user growth in Q1, after being hurt by app performance issues in the second half of 2016. While Snap argues poor mobile connectivity is hurting its international growth, competition is clearly also a factor.

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On the bright side, with over 85% of Snap's Q1 revenue coming from North America and much of the rest from Europe, weak emerging markets growth isn't going to hurt the company's top line a lot in the near term. North American and European DAUs each rose by 3 million sequentially, to 71 million and 55 million. And Spiegel claimed average daily Snapchat usage topped 30 minutes, after being in the 25-to-30 minute range in Q4.

Nonetheless, revenue fell 10% sequentially to $149.6 million, with average revenue per user (ARPU) per DAU falling 14% to $0.90. Seasonality undoubtedly played a big role -- Q4 is a big quarter for ad spending, and Q1 a relatively weak one -- but the decline is nonetheless troubling given how Snap only got serious about monetizing Snapchat in 2016. Ad revenue appears to be down 13% sequentially, since Snap recorded $8.3 million non-ad revenue -- mostly related to its Spectacles video-recording glasses -- in Q1, up from about $4.5 million in Q4.

For comparison, Facebook's ad revenue fell 8% sequentially in Q1 to $7.86 billion, with ad ARPU per DAU falling 13% to $6.12. Thus despite having an ad business that's more than 50 times larger than Snap's, along with a much higher ARPU, Facebook saw smaller sequential ad revenue and ARPU declines.

Snap's Q1 ad performance calls into question whether the company will hit a reported 2017 target of producing nearly $1 billion in ad revenue, not to mention a pre-earnings 2017 revenue consensus of $1.03 billion. A lot of the pre-IPO concerns that were raised about Snap's ability to battle Facebook and Google for online ad dollars now loom larger than ever. Specifically, that Snap has far less scale (coveted by many brand advertisers); that it has much less user data than Facebook, thanks partly to a lack of news feeds, profile pages or likes; and that its lack of a feed limits how many ads it can show a typical user.

Spiegel and strategy chief Imran Khan tried hard on the earnings call to talk up Snap's ad progress, and to argue that Snapchat is a vital platform for marketers trying to reach younger Americans. Spiegel noted over 20% of Q1 ad impressions came via programmatic (automated) ad purchases made through third-party ad platforms leveraging Snap's programming interface (API). Khan highlighted newer solutions such as a self-serve ad-buying platform, a revamped app install ad solution and improved tools for measuring the performance of ad campaigns.

Khan also claimed that 87% of Snapchat's U.S. DAUs can't be reached by any top-15 TV network. But it's a safe bet that a lot of them can be reached by Facebook, Instagram and YouTube. And considering how much Snap's ad business appears to depend on full-screen video ads run against Stories, it can't be overlooked here that Facebook's Stories clones take aim at the most lucrative part of Snapchat's business. Especially since Instagram rolled out Stories video ads in early March that can leverage its existing advertising tools.

For these reasons, Snap's DAU and daily usage figures might not tell the whole story about the impact of Facebook's Stories clones on its business. If a DAU mainly relies on Snapchat to send ephemeral messages that are sometimes monetized via "sponsored" lenses or filters, he or she becomes much less valuable. And the same, of course, might hold true of an advertiser that directs most of its Snapchat ad spend towards lenses and filters.

Spiegel dismissed Facebook's efforts on the call, suggesting they don't make Facebook a threat to Snapchat any more than Yahoo's search engine is a threat to Google. But it's Google user base and ad revenue that dwarfs Yahoo's, not the other way around.

Snap isn't Yahoo any more than it is Google. But like Yahoo, its relatively limited scale and resources do put it in a tough spot. And like Twitter (TWTR) , big questions remain about how much the company can expand beyond a very loyal core user base. Markets now seem to be coming to terms with the scope of the problem.

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