Snap Inc SNAP stock soared to a record high as the social media company smashed revenue estimates along with massive earnings beat. Shares were up more than 20% in after-hours trading. Snap's earnings surprise fueled the stock of its social media peers. In after hours trading, Facebook, Inc. FB gained 3%, Twitter, Inc. TWTR jumped 4.6% and Pinterest PINS gained 5.8%.
Snap's stock has added more than 70% this year with investors sending its stock price up as much as 37% on Wednesday and lifting its market capitalization as high as $57 billion.
Q3 key figures
The Los Angeles-based company delivered $679 million in revenue, smashing past Wall Street expectations at $555 million. Revenue jumped 52% YoY compared to the same period last year.
The social media company unexpectedly reported an adjusted profit of 1 cent per share, topping Wall Street's estimate of an adjusted loss of 5 cents. Snap reported daily active users of 249 million, up 18% from the year-ago period, exceeding its projections in the range of 242 million to 244 million as well as analysts' estimates of 243 million. Net losses fell approximately 12%, from last year's $227 million to $200 million.
Snap reported its daily active users at 249 million which marks approximately a 4% increase from the 238 million it reported in July and 19% up compared to the 210 million from the same quarter one year ago.
Capitalizing on Facebook's ad boycott
The social media company used the third quarter as an opportunity to interact with brands that were looking to align their marketing efforts with platforms who share their corporate values. In other words, Snap took advantage of StopHateForProfit Facebook ad boycott, under which more than 1,000 advertisers paused their ads on the platform back in July. Although Facebook's inaction to contain and fight hate speech and misinformation didn't have any severe consequences on the giant as some brands already returned, Snap used this opportunity to interact with advertisers to show the value of its offering and future prospects.
Snap expects YoY revenue growth in the range between 47% to 50% for the fourth quarter. It expects 257 million DAUs but also an increase in expenses.
While uncertainty has become a new normal when it comes to the global macroeconomy, Snap is pleased with what it achieved and remains highly optimistic about its long term prospects. The adoption of augmented reality is happening faster than the company previously anticipated, and it is working hard to capitalize on this opportunity. Delivering unexpected, adjusted profit along with positive user and revenue growth in its third-quarter earnings shows Snap is headed in the right direction.
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