Snap shares rise almost 30 per cent as strong results convince investors

 
Emily Nicolle
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Snapchat's Earnings Plummet, Sending Its Stock Down 20 Percent
Snap's shares rose more than 20 per cent in after-hours trading last night (Source: Getty)

Shares in Snap have risen almost 30 per cent today, after a bumper set of results acted as a boon to investors looking for signs the tech firm could be revived.


The parent of photo-sharing app Snapchat trounced consensus estimates in its fourth quarter, reporting a revenue rise of 36 per cent to $389.8m (£300.9m), beating the average estimate of $379.4m as collated by S&P Global Market Intelligence.

Its net loss fell to $191.7m, compared to expectations of $254.4m, as chief executive Evan Spiegel told shareholders that the business was now "substantially closer" to turning a profit.

Read more: Snap shares soar as it beats revenue and loss estimates

Growth in daily active users on Snapchat remained flat at 186m, narrowly avoiding a third consecutive decline in users after an unpopular design change last spring.


Snap's news that it had been trialling a new version of its app on Android devices drew some positive reviews from analysts, with at least 11 Wall Street brokerages raising their target price on the stock.

"We are taking comfort in the iOS user stabilisation, [but] the more important product development for us will be the release of the Android app to help reignite user growth," said Credit Suisse analysts in a research note.

Read more: Snap loses its second finance chief in less than a year

However others said they would need to wait a little longer for more favourable signs from Snap's management, before hailing the results as a turnaround for the app.

CMC Markets analyst David Madden said: "Social media is all about popularity, and unless the company can claw back its previous client base, the stock will struggle to get back to the levels seen in 2018 and 2017."

Mediacom chief executive Josh Krichefski added that Snap "will need to continue innovating this year to not just react to its competitors, but force their hand and be the prime mover instead".

As of last night's close, Snap's share price had fallen almost 60 per cent to $7.04 from its debut price of $24.48 in March 2017. The firm's listing on Wall Street is currently subject to a probe by US authorities, following an ongoing shareholder lawsuit which alleges Snap failed to price in Instagram's success on the app's growth.