Why Snap Stock Surged Today

What happened

Shares of Snap (NYSE:SNAP) jumped 7.4% on Friday, following the social media company’s first-quarter earnings release.  

So what

The parent company of Snapchat said its revenue soared 66% year over year to $770 million. The gains were fueled by a 22% increase in daily active users, to 280 million, as more people turned to online entertainment during the coronavirus pandemic.

A digital bar chart is rising in a stair-step manner.

Investors cheered Snap’s impressive first-quarter user and revenue metrics. Image source: Getty Images.

Still, Snap is not yet profitable; it generated a net loss of $287 million during the quarter. However, it did produce positive free cash flow of $126 million.

“We began 2021 by achieving our highest year-over-year revenue and daily active user growth rates in over three years during the quarter and delivering positive free cash flow for the first time in Snap’s history as a public company,” CEO Evan Spiegel said in a press release.

Now what

Management expects Snap to deliver revenue of $820 million to $840 million in the second quarter. That would represent year-over-year growth of roughly 83% at the midpoint and a significant acceleration from the first quarter.

“The strength of our business underscores our relentless focus on product innovation and is a testament to our team’s ability to execute well together over the long term,” Spiegel said.

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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/2021/04/23/why-snap-stock-surged-today/

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