Snapchat Stock Soars on Revenue Gains

Snapchat Stock Soars on Revenue Gains

Barclays raised shares of Snap from an "equal weight" rating to an "overweight" rating and lifted their target price for the stock from $11.00 to $18.00 in a research report on Tuesday, December 5th.

"Our business really came together towards the end of a year ago", Chief Executive Officer Evan Spiegel said in a statement.

Further, the company is not profitable and its advertising business has not yet matured.

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The results mark a rare win for Snap, whose first year as a public company has been hobbled by stagnant user growth and management departures, including the loss of its heads of product and engineering.

The company reported fourth-quarter results as Wall Street was looking for signs of life from an app that struggled at points previous year.

In 2017, the year it went public, Snap recorded a stock-based compensation expense of $2.6 billion, accounting for 77 percent of its net loss and more than three times the amount it generated in revenue. Daily active users grew by 8.9 million during the quarter to 187 million.

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Snapchat closed the year with $825 million in revenue, which was double the revenue of 2016. The company reported ($0.14) EPS for the quarter, topping analysts' consensus estimates of ($0.31) by $0.17. Finally, Cowen lowered Snap from a "market perform" rating to an "underperform" rating and dropped their target price for the stock from $12.00 to $11.00 in a research report on Thursday, January 4th.

During Snap's third quarter earnings call, co-founder and CEO Spiegel acknowledged that Snapchat is harder to understand than he initially realized.

According to allegedly leaked data uncovered by The Daily Beast in January, the biggest concern around the redesign is that it will make the Discover section even less popular. (One year earlier, it had added 10 million in the same quarter.) Wall Street expects Snapchat added six million new users in Q4.

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It accomplished both feats while losing less money than expected. Today is its chance to show that it's at least making progress on fixing those issues. Following the sale, the chief executive officer now owns 86,657,812 shares in the company, valued at approximately $1,076,290,025.04. The Motley Fool has a disclosure policy.

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