Shares of Snap Soar 15% After a Positive Earnings Report

The company increased its revenue and active daily users during the second quarter. 

Snap, the parent company of SnapChat, saw its shares rise 15% after releasing a strong earnings report. The company exceeded revenue expectations and most importantly, showed strong active user growth during the second quarter.

At the time of this writing, the company’s shares are currently trading at $17.97. This is the highest the company’s shares have been since its public offering in March 2018. The company’s shares are up 226% year to date. 

An overview of Snap’s earnings report

During the second quarter, SnapChat added 13 million new daily active users. This brings the company to 203 million total daily active users. This is the biggest increase in users the company has seen since 2016.

The company earned $388.3 million which far exceeded investor expectations of $360.3 million. Snap did lose money during the second quarter but only 6 cents per share, instead of the 10 cents per share investors were expecting. And the company put forth strong third-quarter guidance as well.

Snap’s 2019 turnaround has been pretty remarkable given that at one point, many investors had given up on the company. In 2018, Snap lost several key executives and its app redesign was largely considered a failure. 

But the company has posted strong revenue results for three straight quarters now. And it has seen its active users increase after updating its Android app and adding several new features. And SnapChat’s new facial filters continue to increase user engagement. 

What’s next for Snap?

Analysts have become increasingly bullish when it comes to Snap recently. Stifel upgraded the company to a buy rating. And Goldman Sachs upgraded both its price target and rating on the company, citing “positive trends in user growth and engagement.”

The company does face several challenges going forward. Snap continues to lose money and the company struggles to find a way to appeal to audiences over the age of 35. But if the company can continue to increase its user base and figure out a way to make more money from each user, it should be well-positioned for future growth. 

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