In a surprising, but welcomed, development, Snapchat finally pulled out of its slump to post a boost in revenue and new user growth. The increase beat investor expectations and invigorated the company, with stocks going up by as much as 25 percent.
Snap's mother company, Snap Inc., reported on Tuesday a revenue of $285.7 million for Q4. It also indicated that it also had a 13 cents loss per share in the same quarter. That was a marked improvement to what analysts had previously predicted—revenue around $252.9 million and a loss of 16 cents per share.
Snapchat stock is up nearly 30% in after reporting its first good quarter since going public. Story to come. pic.twitter.com/Lkatenncru
— Seth Fiegerman (@sfiegerman) February 6, 2018
Snapchat also defied expectations regarding its user numbers. The photo-sharing company saw a surge of 9 million new users, pushing its daily users to 187 million. Wall Street analysts had pegged Snapchat to add at most just 6 million new users during the last quarter of 2017.
This led to a major demand for the company's shares during after-hours trading. Stocks of Snap Inc. went up 25 percent to around $17.60 per share, which was more than its IPO price.
The new development has certainly given investors and Snap's stakeholders room to breathe. The company has been laboring with uninspired sales and slow user growth in the past three quarters since it went public. But now it seems Snapchat has bounced back.
The question now is whether the company can sustain this growth. Snap has already made massive changes since its initial public offering. Its software was fixed and updated, and a new auction-based advertising scheme was launched. Snapchat's design has also been revamped in a bid to make it more user-friendly and to appeal to older users. At the moment, the app is more popular among the teenage crowd and millennials.
Spiegel acknowledges users have to adjust to Snapchat's redesign (which got negative reviews) but says it causes Discover publisher Stories viewers to increase 40% and users over 35 to show better metrics https://t.co/EZMaEZTBY9
— Josh Constine (@JoshConstine) February 6, 2018
Snapchat's new look is currently being tested in Australia and the UK. However, reviews about its new design have been less than enthusiastic. The new and improved Snapchat is expected to be released globally by the end of this year's first quarter.
[Featured image via Snapchat]