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Snap Soars On Surprise Earnings Beat

Snapchat

Snap Inc. saw its stock price leap skyward 21 percent after it announced earnings yesterday (Feb. 5) that beat expert predictions across the board.

Snap is still reporting losses, but they were narrower than expected during the December quarter — and it seems the social network part of the business, Snapchat, has seen its user base stop shrinking and begin to level out.  Therefore, though Snap posted 4 cents loss per share it was better than the 7 cents the Street had been forecasting.

On the revenue side Snap snapped up $390 million vs. $378 million forecast pre-release. The site also reports a daily average user count of 186 million — notably higher than the 184.26 expected.

“We ended the year with user engagement stabilizing and have started rolling out the new version of our Android application to a small percentage of our community,” CEO Evan Spiegel said on Tuesday (Feb. 5) in a statement.

Snap’s daily active user base didn’t grow — at 186 million it was essentially flat from the previous quarter — but no one was expecting it would. Instead the consensus was that Snapchat would continue to see the same base shrinkage that had been the central point of concern during its last two earnings reports.

The promising results come at a crucial time, as Snap had been fighting an uphill battle throughout the highly competitive holiday quarter. Snapchat was supplanted by Facebook-owned Instagram as the top social media platform among teenagers, according to a Piper Jaffray report in October. A recent event was the departure of Financial Officer Tim Stone — despite that fact that Stone had joined up with team Snap less than a year ago.

The earnings news was good, but if it feels a bit familiar, it is because it is. During the Q4 earnings report at this time last year, Snap stock price spiked up 50 percent and surpassed its IPO price.

It wasn’t quite as big a result this time around, and Snap has issues still to address.

“We have worked hard to develop our team and culture in 2018,” Spiegel said in prepared remarks. “The transitions we made in both the Snapchat platform and our business last year were necessary and created many of the opportunities we have ahead of us but change is always difficult and this past year was no exception.”

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