Snap’s share price has skyrocketed more than 50% higher in premarket trading after the social media company reported its first ever quarterly profit and beat analyst estimates for the fourth quarter on earnings, revenue, and user growth.
The report comes a day after Facebook parent Meta Platforms delivered disappointing guidance for the first quarter that dragged down several social media stocks with it.
Snap’s stock fell 23.6% yesterday (February 3) prior to its own earnings announcement but popped as much as 62% after hours, before settling up by 52%.
Snap’s earnings per share (EPS) came in at 22 cents U.S. versus 10 cents U.S. that had been expected, according to Refinitiv data. The company’s revenue amounted to $1.3 billion U.S. versus $1.2 billion U.S. that analysts forecast.
Global Daily Active Daily Users (DAUs) at Snap totaled 319 million, while Average Revenue Per User (ARPU) amounted to $4.06 U.S. compared to $3.79 U.S. that was expected.
Snap also provided a first quarter guidance range of $1.03 billion U.S. to $1.08 billion U.S., higher than the $1.01 billion U.S. that analysts had forecast. The company expects daily active users between 328 million and 330 million in the first quarter, beating analyst estimates of 327.8 million.
Snap has to contend with similar headwinds as Meta Platforms, which warned that it anticipates a $10 billion U.S. revenue hit in 2022 as a result of Apple’s privacy changes on iOS that make it harder to target consumers with advertising content.
Snap also distributes its app on Apple iPhones and serves advertising content to monetize its business. But Snap’s direct response advertising businesses experienced a recovery from the iOS changes quicker than anticipated, the company said.
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