Shares of Snapchat parent company Snap Inc. (NYSE:SNAP) soared by over 20% on Tuesday after the company posted its very first quarterly earnings beat since the initial public offering of its shares almost a year ago.
Weak 2017 Performance
Snapchat earnings which have been performing mostly on the negative level over the past couple of months posted its very first earnings beat on Tuesday.
The company has suffered due to its rival social media application companies such as Facebook (NASDAQ:FB) and its subsidiary Instagram who launched their own version of the disappearing image and photo feature in their application.
Snapchat users have then declined at the peak of its top performance that threatened its then massive advertising revenues, which was Snapchat’s leverage prior to its initial public offering.
While the stock have traded by more than 40% higher during its IPO on the mostly positive outlook on its growth the stock of the company have plunged to as low as 45% since its IPO price of $17 per share due to numerous concerns from investors including its disappointing earnings report as well as its cash reserves going down along with their daily users.
Snap Earnings
On Tuesday, the stock of Snap Inc rallied by almost 28% during the after-hours trading as their reported a massive fourth-quarter earnings report that beat most Wall Street estimates for the first time. Analysts initially forecasted the company to post more than $400 million in losses after a series of weak quarterly revenues and declining user growth.
For the fourth quarter, Snapchat delivered a revenue of $285.7 billion compared to most expectations that the company would post a revenue of $252.9 million. Snap also delivered losses of 13 cents per share which is lower than most analysts estimates that the company would post losses of 16 cents per share.
Snap’s revenue per user on an average estimate was at $1.53 compared to estimates of $1.36.
According to Snap CEO Evan Spiegel, the business has come together by the end of 2017. Spiegel also expressed that the company’s team have worked hard in delivering the said results with the company ending the year 2017 more confidently of growing the Snapchat community as well as being able to monetize their products more efficiently.
Spiegel has also stated that they experienced a growth in their publisher content engagement that raised the number of daily active users by more than 40%.
Revenue of the company grew by 72% from the same quarter last year while their cash spending has gone down by 49% to $225 million from the third quarter.