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

07 February, 2018, 01:50 | Author: Sheri Evans
  • Evan Spiegel

It looks like the cloud of doom-and-gloom hanging over Snapchat parent company Snap Inc. may be in the early stages of receding, as the company today posted its first ever better-than-expected quarterly earnings since going public in spring of previous year. On average, analysts estimated $252.95 million in revenue and a loss of 16 cents a share. The company reported ($0.14) earnings per share for the quarter, beating the Thomson Reuters' consensus estimate of ($0.31) by $0.17. 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 first year as a public company hasn't been very good. That would also put Snap's yearly sales at $793 million, nearly double the $404 million it brought in in 2016.

Analysts had expected losses of $409 million, and revenue of around $253 million. But Spiegel was issued a stock award that vested immediately at the time of the IPO, representing 3 percent of all outstanding shares and delivered in "equal quarterly installments over three years beginning in the third full calendar quarter following this offering".

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The announcement late a year ago that Snap meant to completely rebuild the Snapchat app has been welcomed by frustrated users.

The app now has 187 million users, which still puts it far behind rivals like Instagram Stories, a Snapchat clone that now has more than 300 million daily users.

During last quarter's earnings call, CEO Evan Spiegel said the company was redesigning Snapchat in response to complaints that its interface was too complicated.

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Snapchat has sought to distinguish itself from Facebook with a design that "separates social from media", according to Spiegel, who said this helps avoid "many of the problems that arise when friends are commingled with professional content creators". (One year earlier, it had added 10 million in the same quarter.) Wall Street expects Snapchat added six million new users in Q4.

Advertising revenue rose 74 percent to $281 million, as companies advertised more in the key holiday quarter.

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