Snap shares soar over 20% following solid revenue and user growth

Snap shares soar over 20% following solid revenue and user growth

Snap shares soar over 20% following solid revenue and user growth

Snap Inc.'s share price soared more than 26 percent to as high as $17.80 a share in after-hours trading Tues., Feb. 6 after the Snapchat developer posted revenue for the quarter ended December 31 that beat stock analysts' expectations. The company reported ($0.14) earnings per share for the quarter, beating the Thomson Reuters' consensus estimate of ($0.31) by $0.17.

Following the Snap Inc (SNAP) earnings release, the company's stock skyrocketed in after-hours trade, climbing by more than 20% to as high as $17.80 as investors were undoubtedly cheerful about the beat on user adds.

In the previous quarter, Snap has taken a write-down from poor performance of the Spectacles video sunglasses, and it announced a re-design of the app that would make it easier for users to use. This is the first time Snap has beat market expectations since going public a year ago. Quarter-on-quarter growth was 5.05%, compared to 2.9% in Q3.

"Our business really came together toward the end of a year ago", Evan Spiegel, the cofounder and CEO of Snap, said on a conference call with analysts Tuesday. This represented 4.5 million new DAUs, or growth of about 17% year-over-year, but just 3% sequential growth.

Snap, Inc. finally got a much needed turnaround and investors rejoiced. It was Snap's fourth quarterly earnings as a public company. Wall Street expected Snap to add about 6 million daily users during the quarter.

It turns out Snap doesn't have the user growth or business growth that everyone initially expected.

During last quarter's earnings call, CEO Evan Spiegel said the company was redesigning Snapchat in response to complaints that its interface was too complicated. In the new version, users' Discover Stories and friends' stories will reportedly be separated, which means there will be fewer chances for curious users to click on publishers' content, which could further hurt Snap's advertising efforts. Snap's new 8.9 million users will help, but the company will need to keep up the pace in order to thrive.

If you want to know how a company like Snap can lose nearly $3.5 billion in a year, look no further than stock rewards to engineers.

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