Please ensure Javascript is enabled for purposes of website accessibility

Why Snap Stock Popped Today

By Joe Tenebruso - Feb 5, 2021 at 7:48PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Snapchat is adding users at a rapid clip.

What happened

Shares of Snap (SNAP 2.90%) 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. 

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. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Snap Inc. Stock Quote
Snap Inc.
SNAP
$24.10 (2.90%) $0.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
338%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.