Markets

Snap Inc.'s Share Price Soars After Revenue Beats Expectations

Snap Inc.'s Share Price Soars After Revenue Beats Expectations

The social networking company, known for its disappearing messages and popularity among teenagers, surprised Wall Street Tuesday when it announced better-than-expected sales of $285.7 million and a daily user count of about 187 million, 5 percent higher than the 178 million it counted in November past year.

Daily active users rose 18 percent from a year earlier, reversing a trend of slowing growth. Deutsche Bank reissued a "hold" rating and set a $13.00 price objective on shares of Snap in a research report on Monday, January 22nd.

The Snapchat messaging app owner said its revenue rose 72 per cent to $285m in the three months to the end of December, beating analyst expectations, while its net loss widened to $350m, or 28 cents per share. 20,125,059 shares of the company's stock were exchanged, compared to its average volume of 17,015,008. The turnaround appears to be showing signs of life, he added, "although they have much wood to chop ahead and competitive headwinds abound with Instagram front and center". While that's a significant jump from last year's $404 million, it's still a far cry from the $1 billion in annual revenue that some analysts were predicting when the company was hyping its IPO last March.

Almost a year after Snap's March IPO, analysts and investors have been watching to see if Snap can boost user growth amid competition from larger rival Instagram, which has added photo filters and other Snapchat-mimicking features. Snapchat had not growing as quickly as investors had hoped, causing questions about the app's ability to attract a broad audience beyond is base of young, digital savvy users.

Analysts are expecting an increase of between 6 million and 7 million users for the quarter being reported today.

Some of Snapchat's advertising revenue comes from ads that it shows alongside videos and stories created by its publishing partners - media companies like ESPN, Bleacher Report and People magazine.

In addition, quarterly revenue of $253 million would bring its full-year revenue to $793 million. Earlier, they rose 1.5 percent to close at $14.06 in NY.

Still, Snap has a long way to go in its turnaround.

Spiegel said a transition of Snap's ad business to an auction model helped boost revenue. Snap reported a net loss of $350 million for the quarter.

It will also move many of its headquarters employees to leased facilities in Santa Monica, California, during the first half of the year, Vollero said.


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