Snapchat stock soars 25% after ending losing streak

07 February, 2018, 01:59 | Author: Lynette Payne
  • Snapchat overhaul convinces investors it can fight Instagram

Snap Inc.'s revenue topped analysts' estimates for the first time since the company went public nearly a year ago, buoyed by momentum in its advertising business and user growth.

Users - the thing most investors care about - were also way up for Snapchat, with the company adding 9 million daily users to hit 187 million.

Shares traded at $17.73 after the bell, up 26 percent after trading even higher earlier. Wall Street expected Snap to add about 6 million daily users during the quarter. Barclays raised shares of Snap from an "equal weight" rating to an "overweight" rating and lifted their target price for the stock from $11.00 to $18.00 in a research report on Tuesday, December 5th.

Snap's upbeat earnings release was in stark contract to previous quarters, which saw the company struggling with slowing user growth and lower-than-expected revenue numbers. That means Snap is trading right around the price that it sold for during its IPO of $17.

Snap reported fourth-quarter results on Tuesday and said that its share-based pay jumped 27-fold from a year earlier to $181 million, with 72 percent tied to research and development.

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For the full year, Snap's revenue rose to $825m, more than double the $404m it made last year. Earnings per share were -$0.13, beating estimates by three cents.

Snap (SNAP +1%) reports earnings after the close with an eye on the company's recent redesign, and whether it can show it's making up ground against Instagram. That could help Snapchat compete for more of a mainstream audience. Bank of New York Mellon Corp now owns 36,643 shares of the company's stock worth $651,000 after buying an additional 13,336 shares during the last quarter.

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

"We executed well on our 2017 plan to improve quality, performance, and automation, which removed friction from our advertising business and improved our application for the Snapchat community", he said. This is the first time Snap has beat market expectations since going public past year.

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