Snap Inc (NYSE: SNAP) stock generates blockbuster returns; rises >30%

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Snap Inc (NYSE: SNAP) stock surged over 30.4% on 22nd April, 2020 (As of 1:56 pm GMT-4; Source: Google finance) as the company experienced a surge in growth in users and revenue in the first quarter, as homebound users turned to its chat app for connection with friends amid the pandemic. The result was a surprise as many analysts estimate sharp decline in digital ad spending in the first quarter, the first to show the impact of the coronavirus crisis. Meanwhile, the company didn’t provide guidance for the second quarter, due to the continuing pandemic and rapidly changing economic conditions.

The company reported a first-quarter loss of US$305.9 mln, slightly below the US$310.4 mln loss for the same three months last year. However, communication with friends on the company’s Snapchat app have risen by more than 30% in the last week of March compared with the last week of January. In areas hardest hit by the pandemic, the communication with friends on Snapchat increased more than 50%. The company’s daily user base has increased to 11 million from the previous quarter to 229 million, which reflects the fifth consecutive quarter of growth. Snapchat’s ability to increase its user count is crucial to attracting advertisers and revenue. The analysts polled by FactSet had projected the user count to rise to 224 million. The company is partnering with brands on how to best speak with the Snapchat generation and help them discover new products and services as they spend more time at home and online.

Further, In the US, the company continues to reach more than 90% of 13 to 24 year-olds and more than 75% of 13 to 34 year-olds. In the more established international locales such as the UK, France, Canada and Australia, the company reach more than 80% of 13 to 24-year-olds and more than 60% of 13 to 34-year-olds.

SNAP in the first quarter of FY 20 has reported the adjusted loss per share of 21 cents, while adjusted revenue growth of 44 percent to $462.5 million in the first quarter of FY 20, beating the analysts’ estimates for revenue of $430 million. The company attributed some of his company’s ability to increase its revenue to high growth rates in the first two months of the quarter, which offset lower growth in March.

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