Technology

Snapchat shares skyrocket on first earnings beat with revived user growth

Snapchat shares skyrocket on first earnings beat with revived user growth

It also added 8.9 million users, beating expectations of 6 million. Ever since the company behind Snapchat publicly unveiled paperwork with plans for a $20 billion IPO nearly exactly a year ago, concerns have surfaced about Snap's long-term viability.

In the previous quarter, Snap has taken a write-down from poor performance of the Spectacles video sunglasses, and it announced a re-design of the app that would make it easier for users to use. The report, due out after the bell, will round out the Snapchat operator's rather bleak first year as a public company. CNN, for example, launched a daily news show on Snapchat back in August, but cancelled it shortly after when it wasn't making enough money.

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.

After struggling to grow its audience throughout the year, Snap unveiled a significant redesign in November meant to make its messaging service more intuitive to users.

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"Our business really came together towards the end of a year ago", said Evan Spiegel, Snap's CEO, in a statement. This gave investors hope, as they thought that a big change in the app might give it the boost of energy required to regain the user growth rates it once enjoyed. The Discover feature is important because it's where big media players display their content.

Among other features, the redesign promised to have a clearer delineation between content from friends and content from publishers.

Snap spends a ton of money and the company is still not profitable. This tool may also encourage Snapchat users to check the app more often, especially if you don't know how many direct messages you really have. Net losses came in at $349.98 million, compared to net losses of $169.95 million during Q4 of 2016. The Motley Fool owns shares of and recommends Facebook.

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now. and Snap Inc. wasn't one of them! The Motley Fool has a disclosure policy.


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