The Evan Spiegel-led company surprised industry analysts on Tuesday, Feb. 6, when it reported total revenue of $286 million in its fourth quarter of 2017, a 72-percent increase from a year earlier, due to strong user and advertising growth. The company had revenue of $207.90 million during the quarter, compared to the consensus estimate of $236.71 million. Accern also assigned media headlines about the company an impact score of 44.631811453802 out of 100, meaning that recent press coverage is somewhat unlikely to have an effect on the company's share price in the near term.
Investors were quick to reward Snap Inc. generously on Wednesday, February 7th, as the technology and social media company's shares jumped to 39 percent after its unexpected positive earnings report.
Confidence that the two could co-exist in the social media sector was shaken when Snapchat's user growth stalled previous year. The shares were sold at an average price of $12.42, for a total value of $20,529,837.72. Further, the company is not profitable and its advertising business has not yet matured.
During Snap's third-quarter earnings call, Spiegel acknowledged that Snapchat is harder to understand than he initially realized.
Vollero said more than 90% of ads were sold on Snapchat's auction, which is capable of handling larger volumes than a human sales staff, and the company tripled the number of advertisers buying there. The company had a trading volume of 166,232,094 shares, compared to its average volume of 22,712,875. Credit Suisse Group reaffirmed an "outperform" rating and set a $20.00 target price (up previously from $17.00) on shares of Snap in a report on Wednesday, October 11th.
In addition to fixing bugs, the company is redesigning Snapchat to make it easier to use.
Facebook-owned Instagram has threatened Snapchat by copying all of its features and implementing it into its own app. Instagram has twice the amount of daily active users and revenue that Snapchat has. The new version has already launched to 40 million users and will release worldwide in the first quarter, the company said in the call.
Excluding items, Snap reported a loss of 13 cents. Zacks Investment Research lowered shares of Snap from a "hold" rating to a "sell" rating in a research note on Wednesday, January 10th.
Revenue per user rose 46% from a year earlier to $1.53, while cost of revenue per user rose 5% to $1.02. The net loss was $350 million in the fourth quarter, for a full-year loss of $3.45 billion.