Snap shares slump 8% despite big jump in revenue

Dow Jones2021-02-05

MW UPDATE: Snap shares slump 8% despite big jump in revenue

By Jon Swartz

Snap reported daily active users jumped 22% to 265 million, compared to the 257.8 million forecast by FactSet

Snap Inc. shares slumped 8% in extended trading Thursday after the social-media company announced mixed results but warned a change in Apple Inc.'s forthcoming operating system could present a risk for advertising.

Snap (SNAP) reported a net loss of $113.1 million, or 8 cents a share, against expectations of a loss of 7 cents a share, according to analysts polled by FactSet. Snap's revenue soared 62% to $911 million, beating estimates of $852 million.

The company did announce an adjusted quarterly profit of 9 cents a share, its third in the past four years -- Q4 2019 and Q3 2020 being the others.

"Our team has worked tirelessly to help people stay close with their friends and family even while they are physically apart, and we're proud of the strong results we delivered for our advertising partners this quarter and over the full year," Snap Chief Executive Evan Spiegel said in a statement announcing the results.

Another key metric, Snap's average daily active users (DAUs), which measures user growth that helps the company determine how much it is able to charge for advertising, outperformed estimates. Snap reported DAUs jumped 22% to 265 million, compared to the 257.8 million forecast by FactSet.

DAUs are especially important since advertising accounts for nearly all of Snap's revenue.

Snap, like Facebook Inc. (FB) before it, and Twitter Inc. (TWTR), which reports on Tuesday, benefited from a surge in digital ad revenue.

Snap was "able to bring in direct response dollars in the early part of the pandemic and then also recapture branding dollars as that portion of the market started to pick up in Q4," eMarketer analyst Debra Aho Williamson said.

That could be threatened, though, by Apple's $(AAPL)$ upcoming iOS 14 release, which is expected to tighten privacy restrictions and allow users to opt out of some ad tracking.

Sparked by October's unexpectedly strong earnings report, Snap shares have spiked 243% over the past 12 months. The S&P 500 index is up 16% over the past year.

-Jon Swartz; 415-439-6400; AskNewswires@dowjones.com

$(END)$ Dow Jones Newswires

February 04, 2021 16:36 ET (21:36 GMT)

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Snap shares slump 8% despite big jump in revenue

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