Snapchat's co-founder and CEO Evan Spiegel hit New York City on Tuesday to calm investor fears over a lunch of chicken wraps.
Hundreds of investors, with Snap's signature yellow documents in tow, attended Tuesday's 12:30 p.m. EST lunch New York City meeting in the Mandarin Oriental, overlooking Manhattan's Columbus Circle. Dressed in a suit with cuff links and no tie, Spiegel held court on Snap's cloud spending, and its slowdown of users in the fourth quarter, people familiar with the matter told CNBC.
In particular, investors shared concerns that Facebook's Instagram Stories, which launched in August 2016, posed a threat to Snapchat, the people said. User growth has tapered off in recent months, according to Snap's S-1 filing, and some investors are concerned Instagram is the reason.
The company also explained its cloud strategy, saying that while it looks expensive, building data storage in-house is a race to the bottom as cloud storage becomes commoditized, according to the sources.
To do so successfully, it must convince influential investors that buying a stake in the start-up will be worth their while. Snap's revenue grew almost sevenfold from 2015 to 2016, to $405 million. But its losses also widened to $514 million from $373 million in the same period, according to its investor filings.
At the meeting, investors also probed executives on "big picture things" like the direction of the company over the next five years, people familiar with the meeting told CNBC.
Spiegel led the meetings, and came across as a "visionary type" to many investors, people familiar with the meetings said. Chief strategy officer Imran Khan and chief financial officer Drew Vallero also attended, and fielded more technical questions, the people said.
— Reporting by CNBC's Leslie Picker