Whipsawed by Meta’s poor results a day earlier, Snap Inc. reported its first quarter profit along with higher and lower numbers that beat Street’s expectations on Thursday. The results hovered around a recent decline in stocks, with shares jumping 59% in extended trading.
Snap SNAP,
The maker of photo messaging app Snapchat, said privacy changes imposed last year by Apple Inc. AAPL
on iOS devices are hurting Snap’s ability to target and measure its digital advertising, echoing Meta’s concerns. Nonetheless, it persevered through strong sales that could eat away at Meta’s audience.
“2021 has been an exciting year for Snap and we have made significant progress growing our business and serving our global community,” Snap Chief Executive Evan Spiegel said in a statement. “The strength of our core business has allowed us to accelerate our investments in augmented reality, transforming the way the Snapchat community experiences the world through our camera.”
In a Thursday night conference call, Snap chief financial officer Derek Andersen said Snap has been monitoring macro conditions such as supply chain and labor issues as its direct-response advertising had recovered “faster than expected” from Apple’s privacy changes.
Snap was already feeling the Meta Platform Inc. FB.
pain after the company formerly known as Facebook reported a quarter meta bust on Wednesday. Snap’s stock cratered 23% in Thursday trading to close at $24.51, a 52-week low, before soaring in after-hours trading.
Snap reported net income of $22.6 million, or a penny per share, compared to a loss of $113.1 million, or 8 cents per share a year ago and beating Street forecasts of a loss of 9 cents per share, according to analysts polled by FactSet. . Snap’s adjusted earnings were 22 cents per share.
Snap’s sales rose 42% to $1.3 billion, beating Street’s estimate of $1.2 billion. Snap surpassed $4 billion in sales in 2021. Company executives previously offered forecasts of $1.165 billion to $1.205 billion.
Snap said it expects Apple’s privacy changes and global supply chain disruptions to linger for a few more quarters. Executives released first-quarter revenue forecasts of $1.03 billion to $1.08 billion, matching the $1 billion forecast on average by analysts polled on FactSet.
Thursday’s precipitous stock drop wiped out recent gains; Snap shares have plunged 48% so far this year, while the broader S&P 500 index SPX
fell 6% in 2022. Shares of Meta, by comparison, are down 29% this year, while Pinterest Inc. PINS
is off 32% and Twitter Inc. TWTR
is down 20%.
“Snapchat is clearly not as prone to the TikTok effect as Meta, with strong daily active user growth across all regions, including North America,” said Insider Intelligence analyst Jasmine Enberg. in an e-mail message. “Even so, most of the growth has come from the rest of the world, and likely from India, where TikTok remains banned.”
Snap reported 319 million daily active users in the fourth quarter, beating an average analyst forecast of 317 million, according to FactSet.
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