Snap Shares Drop 8% Despite Big Rise In Revenue

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Shares of Snap Inc. fell 8% in extended trading on Thursday after the social media company announced mixed results, but warned that a change to Apple Inc.’s upcoming operating system could present a risk to advertising. Snap SNAP, -1.60% reported a net loss of $ 113.1 million, or 8 cents a share, versus expectations for a loss of 7 cents a share, according to analysts surveyed by FactSet. Snap‘s revenue soared 62% to $ 911 million, topping estimates of $ 852 million.

The company announced an adjusted quarterly profit of 9 cents per share, the third in the last four years, the fourth quarter of 2019 and the third quarter of 2020 are the others. “Our team has worked tirelessly to help people stay close to friends and family even when physically separated, and we are proud of the strong results we achieved for our advertising partners this quarter and throughout the year,” said the director. Snap executive. Evan Spiegel said in a statement announcing the results. Another key metric, Snap‘s Average Daily Active Users (DAU), which measures user growth and helps the company determine how much it can charge for advertising, beat estimates. Snap reported that DAUs increased 22% to 265 million, compared to the 257.8 million forecast by FactSet. DAUs are especially important since advertising accounts for almost all of Snap‘s revenue. Snap, like Facebook Inc. FB, -0.06% earlier, and Twitter Inc. TWTR, + 3.54%, reporting Tuesday, benefited from an increase in digital ad revenue. Snap was “able to generate direct response dollars in the early part of the pandemic and then also recover brand dollars when that part of the market started to rebound in the fourth quarter,” said eMarketer analyst Debra Aho Williamson. However, that could be threatened by Apple’s AAPL, the upcoming + 2.58% iOS 14 release, which is expected to tighten privacy restrictions and allow users to opt out of following some ads. Shares in Snap, boosted by October’s unexpectedly strong earnings report, have soared 243% in the past 12 months. The S&P 500 SPX index, + 1.09% has risen 16% over the past year.