Snap Stock Soars On Q4 Profit Beat, Ad Sales, User Growth Surprise

On Feb 4, 2022

[ad_1]

Snap (SNAP) – Get Snap, Inc. Class A Report shares soared the most on record in pre-market trading Friday, in a move that could add nearly $20 billion to the message-app maker’s market value, following better-than-expected fourth quarter earnings and a robust near-term outlook.

Snap, which had been hit hard by privacy changes put in place by Apple (AAPL) – Get Apple Inc. Report that limits its ability to sell targeted ads, said it’s been able to transition to new techniques “quicker than we expected”, and added 319 million new users over the three months ending in December, helping revenues rise 42% from last year to a Street-beating $1.3 billion while notching its first positive net income as a public company.

The gains were even more impressive given he impact of Apple’s (AAPL) – Get Apple Inc. Report Identifier for Advertisers (IDFA) privacy changes and intensifying competition from China-based TikTok, which was cited by Meta Platform’s CEO Mark Zuckerberg as a having a big influence on its loss of daily active users.

Snap had cautioned investors in October that supply chain disruptions would hit advertising spending in the social media sector over the final three months of the year, adding that Apple’s privacy changes made it more difficult to track and target users with specific ads, “making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS.”

Looking into the coming year, however, Snap said it sees user growth in the region of 328 million to 330 million, with revenues easing to just of $1 billion, with both tallies again topping Street estimates.

“At a high level, the macro headwinds we anticipated, entering the quarter, materialized largely as we expected, but our Direct Response advertising business began to recover from the impact of the iOS platform changes, quicker than we anticipated,” CFO Derek Anderson told investors on a conference call late Thursday.

“In Q4, we experienced better-than-anticipated demand from Direct Response advertising partners. And our Direct Response advertising business was, once again, the largest driver of our growth,” he added. “We observed that advertisers began to recover from the initial disruption caused by the iOS platform changes and the resulting impact on the ability of our advertising partners to measure the results of their advertising investments.”