Snap inventory closes 23% day after revenue hit
Evan Spiegel, CEO of SNAP Inc.
Stephen Desaulniers | CNBC
Snap’s shares rose 23% on Friday as the company continued its strong bottom line in the second quarter.
The company’s stock was up as much as 25%.
The company had 293 million daily active users worldwide, compared to an expected 290.3 million per StreetAccount. That’s also an increase of more than 23% compared to the 238 million daily users the company reported a year earlier.
Investors were encouraged by the strength of the users and the dedication. Snap’s ad growth was also a major highlight as concerns about potential privacy changes at Apple iOS were largely mitigated during the quarter.
Snap said the company was not affected by the iOS 14.5 privacy changes, as it expected. This was because the mobile operating system update was rolled out later than expected, iOS users were slow to update their devices, and Snap “observed higher opt-in rates than we commonly reported across the industry, which we believe in part This is due to the trust our community has in our products and our business, “said Snap manager Jeremi Gorman on Thursday.
“We have written a lot in the last 9 months about the strength of the online advertising markets … but even we underestimated the results for the second and third quarters,” wrote Morgan Stanley analysts in a statement on Friday.
“SNAP’s advertising revenue has been diversified across all use cases (Stories, Discover, Lenses, and AR, etc.) as performance-driven innovations such as improved matching, dynamic product ads, and new AR lenses lead to higher advertiser growth and per-advertiser spend” the company added.
Wells Fargo analysts also pointed to the company’s broad-based growth and commitment.
“While the final impact remains uncertain, we are confident that SNAP will continue to thrive across its five major platforms (Stories, Camera, Spotlight, Map and Communications), with the resulting strong engagement trends amid innovation, improvement and adoption on several fronts (new ad formats, AR tools, optimization, original content, games) with sufficient monetization, “said the company in a statement on Friday.
Twitter also reported profits on Thursday and posted the fastest revenue growth since 2014. Twitter shares posted less gains on Friday, up 3%. Snap and Twitter earnings could bode well for the advertising segments of Alphabet, Facebook, Pinterest, and Amazon, all of which are reporting profits next week.
– CNBC’s Salvador Rodriguez and Michael Bloom contributed to this report.
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