Eyes on redesign, user growth in Snap's upcoming earnings

Will Snap Have More Bad News When It Reports Earnings?

Will Snap Have More Bad News When It Reports Earnings?

It looks like the cloud of doom-and-gloom hanging over Snapchat parent company Snap Inc. may be in the early stages of receding, as the company today posted its first ever better-than-expected quarterly earnings since going public in spring of previous year.

The number of daily active users of the Snapchat application rose to 187 million, a gain of 8.9 million in the quarter and up 18 percent from a year earlier. The poor report included slowing user growth and a revenue miss, and showed no clear path to profitability. Earlier, they rose 1.5 percent to close at $14.06 in NY.

The company has also suffered from unfavorable comparisons to Facebook Inc.'s Instagram, which is rapidly expanding and aggressively copying Snapchat's most-popular features. On average, analysts estimated $252.95 million in revenue and a loss of 16 cents a share. Its net loss was about $350 million for the quarter ended December 31. He also cited improvements to the company's Android app as part of the reason DAU numbers have risen, saying "people who try Snapchat on Android are much more likely to stick around and become Daily Active Users".

"Our work during 2017 is proof that we aren't afraid to make big changes for the long-term success of our business", Evan Spiegel, the cofounder and CEO of Snap, said in a statement.

Analysts were expecting the company to add 6 million users during the fourth quarter. The retention rate of new Snapchat users on Android increased by almost 20 percent compared to the year prior, according to prepared remarks. Since its last earnings call, Snap rolled out updates to its social media platform that it hopes will help it keep up with competition from Facebook's Instagram. Snap Inc (SNAP) management said the Q4 2017 result was the best quarter for user adds since Q3 2016.

Investors were impressed. The company's shares, which have almost halved in the past year, rose more than 20 percent in after-hours trading to $16.95. The company's revenue for the quarter was up 62.2% on a year-over-year basis. Snap has a 52 week low of $11.28 and a 52 week high of $29.44.

But while Snapchat may still be the go-to place for teens and college students to share photos and short videos with friends, the problem for Snap is that it's hard to monetize that content.

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