Why Snap Stock Popped Today

What happened

Shares of Snap (NYSE:SNAP) jumped 9% on Friday following the release of the social media company’s solid fourth-quarter results. 

So what 

The parent company of Snapchat saw its daily active users climb 22% to 265 million. Snap’s revenue, in turn, leaped 62% to $911 million. That was well ahead of the $857.4 million in revenue Wall Street had expected. 

“Our team has worked tirelessly to help people stay close with their friends and family even while they are physically apart, and we’re proud of the strong results we delivered for our advertising partners this quarter and over the full year,” CEO Evan Spiegel said in a press release.

A glass bar chart rising in a stair-step manner.

Investors applauded Snap’s strong Q4 growth metrics. Image source: Getty Images.

Snap reported a net loss of $113 million in the fourth quarter. However, the company generated its first full year of positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). This measure of profitability improved to $45 million in 2020 from a loss of $202 million in the prior-year period. 

Now what

Management expects Snap’s revenue to rise roughly 58% year over year to $730 million in the first quarter. However, Snap warned that Apple‘s upcoming privacy changes on its mobile devices could undermine its advertising business. 

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Still, Spiegel said Apple’s move to protect the privacy of its customers was the right thing to do. “We generally view this as a good thing overall for consumers, even if it’s a little disruptive for advertisers in the near term,” Spiegel told CNBC. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/02/05/why-snap-stock-popped-today/

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