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Why Snap Stock Is Skyrocketing Higher Today

By Daniel Sparks – Jul 23, 2021 at 10:13AM

Key Points

  • Revenue more than doubled year over year.
  • The company swung from a loss in the year-ago quarter to a profit on an adjusted basis.
  • Management says growth will decelerate in Q3 as the company faces tougher comps.

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Snap's revenue, earnings, and user growth all surpassed analyst estimates -- and guidance looks promising, too.

What happened

Shares of Snap (SNAP 1.07%) surged at market open on Friday, rising about 24% during the first 15 minutes of trading.

The growth stock's gain follows the Snapchat parent's second-quarter earnings release on Thursday. Shares are trading higher because the company obliterated analyst estimates, posting huge growth in revenue and adjusted earnings per share.

The words, Snap Inc.

Image source: Snap.

So what

Social network company Snap reported 116% revenue growth, putting total revenue at $982 million. Analysts, on average, were expecting revenue of $846 million. This strong top-line outperformance led to a big beat on Snap's bottom line, too. Adjusted earnings per share for the period swung from a loss of $0.09 in the year-ago period to a profit of $0.10. This was ahead of a consensus forecast for $0.01.

Financial results during the period were bolstered by an easy year-ago comparison. Revenue growth slowed in the second quarter of 2020 as advertiser spending took a hit.

Snap's user base also grew nicely, with daily active users increasing 23% year over year to 293 million.

Now what

As Snap faces a tougher comparison in Q3, the company guided for decelerated growth during the period, although management's guidance for 58% to 60% growth was ahead of analysts' forecast.

In the company's second-quarter earnings release, Snap CEO Evan Spiegel said the company is "energized by the many opportunities to grow our community and business around the world."

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Snap Stock Quote
$9.40 (1.07%) $0.10

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