There were a lot of big movers in the stock market prior to and over the weekend. One sector that did surprisingly well on Friday was the online advertising sector, which includes a number of social media companies that thrive on selling ads to users. One of those is Snap (NASDAQ: SNAP), originally a camera company that became one of the world’s most popular social networking apps. Shares are up big-time as the company reported a solid second quarter.
The company reported that it had grown to over 293 million active daily users, slightly edging out over most analyst’s expectations. Compared to a year ago, that’s also a 23% increase in daily users. Additionally, revenues were up 116% to $982 million, once again handily surpassing Wall Street’s best-case scenario. Although Snap continues to report a significant loss of $152 million, its revenue and daily user figures are at a four-year high. For growth stocks like Snap, that’s all that shareholders are really interested in right now.
“We have written much about the strength of the online ad markets over the past 9 months…but even we under-estimated 2Q/3Q results,” said Morgan Stanley analysts in regards to the company’s results. “SNAP’s ad revenue strength was broad-based across use cases (Stories, Discover, lenses and AR, etc) as performance-focused innovation like improved matching, dynamic product ads, and new AR lenses are leading to increased advertiser and spend per advertiser growth.”
Following the news, most other analysts either upgraded the stock or doubled down on their previously bullish recommendations. Jefferies analysts raised their target price for Snap to $90, implying another 20% upside. Barclay’s also upgraded Snap, lifting its price target to $81 per share.
Shares of Snap are up more than 23.5% following the release of its Q2 results. Over the course of the past 12 months, the company’s stock has steadily gained more than 254.9%. That’s in spite of everything that was going on last year with the pandemic. Out of the 38 or so analysts on Wall Street covering Snap right now, 28 of them have a bullish rating, nine have a neutral, while just only one remains bearish right now.
Snap wasn’t the only social media company to make waves in the financial markets. Twitter (NASDAQ: TWTR) also jumped 7% after its Q2 results also impressed shareholders. Revenues were up 74% to $1.19 billion, while total ad engagements were up 32%. Best of all, Twitter managed to report a net profit of $66 million, compared to the $1.4 billion net loss seen a year ago. Wall Street analysts also upgraded Twitter in response to this news as well. Both companies were among the better-performing stocks prior to the weekend, and both are continuing to report gains right now in pre-market trading.
Snap Company Profile
Snap, which refers to itself as a camera company, has one of the most popular social networking apps, Snapchat, in developed regions such as North America and Europe. The firm has approximately 158 million daily active users. Snap generates nearly all of its revenue from advertising with 88% coming from the U.S. The firm is headquartered in Venice, California. – Warrior Trading News
