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rough ride on the public market just got rougher. Shares plunged as much as 16% in after-hours trading on Thursday after the company missed expectations for revenue, earnings and user growth in its second quarter as a public company.

Revenue in the second quarter, ending June 30, rose 153% to $181.7 million, from $71. 8 million in the same period a year earlier, below the $186.8 million expected on average among analysts polled by Yahoo Finance. (The full results are available here.) Snap generates nearly all of its revenue through mobile ads, which it displays in its “Stories” format. Snapchat also sells advertisers sponsored user tools, filters and lenses, competing with and for marketers’ digital advertising dollars, as well as for a growing slice of companies’ television advertising budgets.

The company posted a net loss of $443 million, or 16 cents a share, larger than the 14 cents per share loss forecast by analysts. Expenses in the quarter totaled $2.2 billion, attributed mostly to a $2 billion stock-based compensation cost. Snap reported average revenue per user of $1.05 in the second quarter, with most growth coming from North America. RBC Capital Markets analyst Mark Mahaney had estimated average revenue per user of $1.19 for the quarter.

A major source of concern among investors is Snapchat’s slowing (and slower-than-expected) user growth. Snapchat’s daily users grew 21% year-over-year to 173 million, from 143 million users the same period a year earlier. Daily active users increased just 4% from the first quarter to the second quarter.

While quarter-to-quarter user growth missed Street estimates (10 million daily users), Spiegel said on a conference call with investors that Snapchat saw its highest ever time spent and engagement metrics on an aggregate and per user basis during the quarter, and the average daily user sends more than 20 “snaps” per day. Spiegel said new features like “customer Stories” and “Snap map” are intended to promote sharing between users, which trickles down into more advertising revenue and creates a “virtuous cycle.” Spiegel added that the company will continue building out more augmented reality features, highlighting the company’s hot dog filter, which has been viewed 1.5 billion times in snaps, as a successful example.

“Our dancing hot dog is most likely the world’s first augmented reality superstar,” Spiegel said.

“We’ve been able to grow in saturated markets because we’re so focused on innovation,” he added.

The threat posed by Facebook Inc., which recently copied Snapchat’s pioneering “Stories” feature and lenses across its suite of apps, can’t be ignored. Facebook-owned Instagram now has more daily users than Snapchat, while Facebook’s main app has grown to 2 billion monthly users and Messenger and WhatsApp have grown to about 1.2 billion users.

Snap has been focused on product innovation and building outs its growing mobile ad business, which touts the app’s young users base, the majority of which is made up of teens and millennials. Working to justify its approximately $16-billion market cap, Snap has been bolstering its third-party measurement partnerships and expanding its ad offerings and debuted its self-service advertising platform in June. The company has emphasized its intention to focus on monetizing users in developed markets as opposed to seeking ubiquity.

Product-wise, Snap recently experimented with hardware with the launch of video-capturing sunglasses called “Spectacles” last year. In April, the company announced a set of new augmented reality (AR) feature. Spiegel, who is considered a product genius, has repeatedly described Snap as a “camera company,” focused on letting people “talk” through images and video.

Like Snap, Facebook is also pushing aggressively into video and augmented reality. Facebook CEO Mark Zuckerberg has said he plans to make the social network “video-first,” and both companies have been working on teeing up TV-like programming. Facebook has been heavily promoting video and live video tools within its flagship app, and on Wednesday, unveiled a prominent, new video tab called “Watch.” At Facebook’s annual F8 developer conference in April, Zuckerberg announced the social network was opening its AR platform to developers to enhance images people share on the social network using smartphone cameras. Zuckerberg also hinted at the company’s plans to create AR glasses down the line, betting that AR will take off broadly among consumers before virtual reality, which Facebook invested in through its $2-billion acquisition of VR headset-maker Oculus.

Snap rose less than 1% to $13.77 during regular trading on Thursday. The stock is down about 19% from Snap’s $17 March 1 initial public offering price as of Thursday’s close. On a conference call, Spiegel said he and his cofounder Bobby Murphy will not sell any of their Snap shares this year.

Follow me on Twitter @kchaykowski and e-mail me at kchaykowski@forbes.com.

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