Snap shares rocket 28% as company reports unexpected profit

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107368592 1706907728261 gettyimages 1483400455 js3 9363 zsy4sqdx

At the Snap Partner Summit 2023 in Santa Monica, California, Snap shares surged by 28% after the company posted profits and reported strong sales and user numbers exceeding analysts’ expectations.

The stock closed at $14.55, increasing by $3.15, marking its biggest gain since 2022, although it is still down 14% for the year due to a previous drop. Revenue in the first quarter rose by 21% to $1.19 billion, surpassing estimates of $1.12 billion, while adjusted earnings per share were 3 cents, contrary to the expected 5-cent loss.

Snap mentioned that its adjusted EBITDA exceeded expectations, primarily due to operational cost control and revenue growth. The company has been focusing on rebuilding its advertising business, which paid off with improved revenue growth driven by enhancements in the advertising platform.

User growth was also stronger than predicted, with Snap reporting 422 million daily active users in the first quarter, beating the average analyst estimate. Advertising revenue came in at $1.11 billion, while the “Other Revenue” category, driven by Snapchat+ subscribers, reached $87 million.

Despite this growth, Snap fell behind Meta in terms of percentage growth. Meta reported 27% growth in its first-quarter results but issued a light forecast, causing its shares to drop. Snap expects revenue between $1.23 billion and $1.26 billion in the second quarter, higher than analysts’ expectations.

For more information, you can watch CNBC’s full interview with Snap CEO Evan Spiegel.

Snap’s shares surged 28% after the company reported a profit and exceeding analysts’ estimates for sales and user numbers. Revenue in the first quarter increased by 21% to $1.19 billion, with adjusted earnings per share of 3 cents. Snap’s advertising business has been growing, with revenue primarily driven by improvements in the advertising platform and demand for direct-response advertising solutions. The company’s user growth also exceeded expectations with 422 million daily active users in the first quarter. In February, Snap announced layoffs but reported that headcount and personnel costs will modestly grow for the remainder of the year. Advertising revenue reached $1.11 billion in the first quarter, with additional revenue coming from Snapchat+ subscribers. Despite strong growth, Snap still lagged behind Meta, which reported 27% growth in its first-quarter results. Snap expects revenue between $1.23 billion and $1.26 billion for the second quarter.

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