Snap Quarterly Revenue Jumps 44% as Coronavirus Pandemic Boosts Snapchat Users; Shares Soar 20% in Pre-Market Trading

Snap Inc. (SNAP) reported a 44% increase in first-quarter revenue as global stay-at-home orders boosted daily active usage of its Snapchat app.

Revenue in the first three months of the year increased to $462 million year-on-year, coming in just above the midpoint of the company’s guidance range, while beating analysts’ estimates of about $428 million. Netflix’s net loss narrowed to $305.9 million, or 21 cents a share, from $310.4 million, or 23 cents a share, a year earlier.

Daily active users using Snapchat jumped 20% to 229 million in the first quarter compared with the same period last year. Users created over 4 billion snaps with its camera every day on average.

“Communication with friends increased by over 30% in the last week of March compared to the last week of January, with more than a 50% increase in some of our larger markets,” said Evan Spiegel, CEO and Co-Founder of Snap. “Snapchat has always been focused on helping people build and maintain their friendships, which is especially critical as people practice physical distancing and shelter in their homes.”

Spiegel added that the company experienced a sharp rise in group-related activities across chat, calling, and games. To meet the demand, Snap launched five new games and saw average daily time spent in games more than double in March.

Moreover as more and more people use videoconferencing and livestreaming technologies to work and socialize during the coronavirus pandemic, the company saw more than a 30x increase in the daily downloads of its Snap Camera desktop app which allows people to add its suite of lenses to whichever videoconferencing service they use.

Looking to the second quarter, Snap estimated year-on-year revenue growth to be 15% through April 19th, adding that the estimated growth rate in the most recent week was 11%.

Four-star analyst John Egbert at Stifel Nicolaus lifted the company’s price target to $18 from $15, while maintaining a Buy rating on the shares, citing better-than-expected earnings results. The company’s shares are up 20% in pre-market U.S. trading after falling 3.7% to $12.44 on Tuesday.

Egbert added that despite expectations of “depressed levels” of growth in coming quarters as the global advertising market will be negatively impacted by the COVID-19 pandemic, the company’s ad business has been “properly fortified to weather the storm.”

The rest of the analyst community has a cautiously bullish stance on the company’s stock. 20 Buys and 11 add up to a Moderate Buy consensus rating. The $16.95 average price target would provide investors with a 36% gain in the shares, should the target be met in coming 12 months. (See Snap stock analysis on TipRanks).

As of the end of the first quarter, Snap had $2.1 billion in cash and marketable securities, and an available credit line of over $1 billion.

Related News:
Netflix Wins 15.8 million subscribers in Q1, Sees Growth Slowing in Virus Aftermath
Facebook Invests An Eye-Watering $5.7B in India’s Jio Platforms
Snap Can Weather COVID-19’s Impact on Ad Budgets, Says 5-Star Analyst


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