Snap Inc (NYSE:SNAP) has mounted a big recovery in February and year to date the stock is up around 60%. It has been a tremendous turnaround for a stock that was trading below $5 not too long ago and seemed destined to continue to slide.
However, a strong finish to the 2018 fiscal year was enough to turn things around for the company, at least in the short term. Revenues during the last quarter of the year were up 36% even though daily active users showed no improvement. Its bottom line was still in the red, but the loss of $192 million was a shallower hole than the $350 million loss that it incurred a year ago.
These are small wins for the company as it tries to find ways to find value to advertisers. With 186 million daily active users, it could very well be that the company has plateaued and continuing to grow from a user base that big isn’t going to be easy. And so it’s all the more important that Snap focuses on creating value from its existing user base rather than just trying to keep on adding users.
One way the company has done that is through video. Snap’s focus on made-for-mobile video has proven to be successful thus far and has kept its users glued to their phones, watching more Publisher Stories and other shows as well. The company has also looked to increase its content offerings internationally as well.
So far the strategy looks to be working for Snap and it’ll be interesting to see if its numbers get stronger in future quarters as a result. It’s still a bit of a risky buy today, but it definitely has a lot of upside.
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