Snapchat parent soars 25% after beating revenue, user growth estimates
Shares in Snap jumped nearly 25% in on Friday after targeted ads and new features helped the owner of the photo messaging app beat Wall Street expectations for first-quarter revenue and user growth.
The Snapchat parent now expects second-quarter revenue between $1.23 billion and $1.26 billion, above analysts' estimates of $1.22 billion, according to LSEG data.
Snap said its business was improving faster than expected due to upgrades of its ad system and higher demand for features that help brands drive sales or website clicks.
Snap was set to add $4.7 billion to its market value, if gains hold. Social media platform Pinterest climbed 4%.
«Revenue per user increased year over year for the first time since early 2022, reflecting the strength in the broader advertising market and Snap's efforts to revive growth,» Morningstar analyst Michael Hodel said.
Daily active users of Snapchat increased to 422 million during the quarter, above estimates of 419.6 million. The company said first-quarter revenue grew 21% to $1.2 billion, above estimates of $1.12 billion.
While 18 Wall Street brokerages raised their price targets on Snap's shares following results, most analysts said they were looking for more consistent evidence that company's business has improved.
«Snap's results have historically been choppy and we are hesitant to extrapolate from one quarter of strong results,» according to J.P.Morgan analysts.
Average rating of 41 brokerages covering the stock is «hold».
The stock has lost about a third of its value
