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Why Snap Stock Surged Today

By Joe Tenebruso - Updated Feb 23, 2021 at 5:08PM

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The prospect of accelerating revenue growth has investors intrigued.

What happened

Shares of Snap (SNAP 5.45%) jumped 11% on Tuesday, following the social media company's first investor day event. 

So what 

The parent company of Snapchat told analysts and shareholders that it expects to grow revenue by at least 50% annually for the next several years. That would be a significant acceleration from the 46% revenue growth Snap delivered in 2020. 

A rising digital chart.

Investors cheered Snap's long-term growth projections. Image source: Getty Images.

CEO Evan Spiegel said the gains will be fueled by more-engaging video formats and new technologies such as augmented reality, which overlays computer-generated images into the views users see on their mobile devices' screens. "It is augmented reality that is driving our future," Spiegel said. "We are doubling down on this strategy in 2021."  

Now what

Chief business officer Jeremi Gorman noted that Snap currently commands about 2% of the massive U.S. digital advertising market. Yet the social media platform reaches roughly half of all mobile phone users in the country. Thus, Gorman believes Snap is well positioned to gain market share in the coming years. 

Still, if Snap is to deliver solid long-term returns to investors, it will need to show that it can reach a level of sustained profitability. It generated net losses of $1 billion and $945 million in 2019 and 2020, respectively. 

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