Today, the shares in Snap have increased by nearly 30 percent. It comes after a bumper set of results that acted as a boon to investors who are looking for signs that the tech company could be revived.
Snap is the parent company of Snapchat, the photo-sharing app. It exceeded consensus estimates in its fourth quarter after reporting a 36 percent increase in revenue to $389.8 million (£300.9 million). It surpassed the average estimate of $379.4 million as collated by S&P Global Market Intelligence.
Its net loss dropped to $191.7 million as compared to the expectations of $254.4 million. It comes as Evan Spiegel, the chief executive of the company, informed shareholders that the business was now “substantially closer” to reporting a profit.
The increase in daily active users on Snapchat continued to be flat at 186 million, narrowly avoiding a third consecutive drop in users following an unpopular change in its design last spring.
The news that Snap had been testing a new version of its app on Android devices drew some positive reviews from the analysts, with at least 11 Wall Street brokerages increasing their target price on the stock.
In a research note, analysts from Credit Suisse stated: “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.”
However, others said that they would need to wait a little longer for more favourable signs from the management of Snap, before hailing the results as a turnaround for the app.
David Madden, an analyst from CMC Markets, stated: “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.”
Josh Krichefski, the chief executive of Mediacom, said 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, the share price of Snap had dropped by nearly 60 percent to $7.04 from its debut price of $24.48 in March 2017. Currently, the listing of the company on Wall Street is subject to an investigation by authorities in the United States, after an ongoing shareholder lawsuit which alleges that Snap failed to price in the success of Instagram on the app’s growth.