Snap jumps 20% in the stock market on an upbeat earnings report

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Apr 22, 2020
Updated: Apr 28, 2020
  • Snap Inc. posts £374.17 million in revenue in the first quarter but loses 6.48 pence per share.
  • The social media company records its global daily active users at 229 million in Q1.
  • Snap’s average revenue per user came at £1.64 as compared to the year-ago figure of £1.36.

Snap Inc. (NYSE: SNAP) announced its first-quarter financial results on Tuesday that topped analysts’ estimates for revenue. The upbeat earnings report sent its stock roughly 20% up in extended trading.

Snap recorded its global DAUs (daily active users) at 229 million in the first quarter that marked a massive 20% (39 million users) increase as compared to the same quarter last year. The company also said that in terms of user growth (year over year), it was its best performance since 2017’s second quarter.

Snap’s Q1 Results Versus Analysts’ Estimates

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According to Refinitiv, experts had forecast Snap to print £347.29 million in revenue in the recent quarter. In terms of loss per share, they had estimated 5.67 pence in Q1. As per the company’s earnings report, however, it generated a higher £374.17 million in the first quarter but posted a higher 6.48 pence of loss per share (adjusted).

Snap’s average revenue per user (ARPU) came at £1.64 as compared to the year-ago figure of £1.36. The company also highlighted a 35% growth (YoY) in daily time that users spent on exploring content in Snapchat’s Discover section.

Snap’s revenue translates to a massive 44% increase in the first quarter as compared to £259.17 million that it recorded in the same quarter last year. CEO Evan Spiegel of Snap Inc. commented on the earnings report on Tuesday and stated:

“Snapchat has always been focused on helping people build and maintain their friendships, which is especially critical as people practice physical distancing and shelter in their homes.”

Snap launched App Stories in March that opened the social media company’s world-renowned “Stories” feature to 3rd party developers’ applications. The new feature, Snap added, will help introduce a wider circle of potential users to Snapchat that will help increase its advertising revenue and maintain shareholder confidence via consistent user growth.  

Snap’s Performance In The Stock Market

At £12 per share, Snap Inc. is currently around 10% down year to date in the stock market. In March, the stock had dropped to as low as £7 per share but recovered quickly in the subsequent weeks.

In 2019, on the contrary, Snap’s performance in the stock market was reported largely upbeat with an annual gain of around 180%.

Snap went public in March 2017 when its shares were priced at £22.

At the time of writing, Snap Inc. has a market cap of £14.30 billion.

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