Why Twitter and Snap Surged

Social media companies are thriving. Twitter’s (NYSE:TWTR) strong Q2 report is proof of that. Snap (NYSE:SNAP) also reported strong user growth not seen in years. Both stocks surged last week.

Twitter posted non-GAAP EPS of 20 cents. Revenue grew by 74.1% Y/Y to $1.19 billion. Monetizable daily active users were flat Y/Y at 206 million. Looking ahead, TWTR will lose up to 50 million in Q3. Investors who thought banning Trump would hurt the user base were wrong. As long as the world faces turmoil, Twitter revenue will grow.

Censorship remains a risk for Twitter’s growth. Fortunately, Twitter cleaned up spam bots from the site, which improves the validity of the mDAU metric.

Snap rallied by ~24% last Friday when it posted revenue growing by 116.2% Y/Y to $982 million. It earned 10 cents a share non-GAAP (or a 10-cent loss on a GAAP basis). It set a revenue forecast of $1.07 billion to $1.085 billion in Q3, compared to the $1.01 billion consensuses.
Snap earned a strong rally in the last week. Google and Pinterest led the sector. Snap is the next app to take the lead from here as investors bet on continued user growth.