The social media landscape can be difficult for investors to navigate. The industry is still nascent, and early winners seem difficult to dethrone -- but are there companies out there that investors shouldn't ignore?
In this clip from "The Virtual Opportunities Show" on Motley Fool Live, recorded on April 26, Motley Fool contributor Travis Hoium shares one virtual opportunity that he thinks is worth a look.
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Travis Hoium: Snap (SNAP -2.54%) is one that I know I've brought up before on this show as a virtual opportunity that investors shouldn't overlook. This is a social media company that, I think, when it first came public, it wasn't really a favorite of the market because you had Facebook doing so well, and they just weren't really able to monetize their customers very well. But those trends have really changed. It's become, it's always been a very popular platform for younger users, which I think was really the bullish case if you were a Snap investor, was that those users will eventually get older. And you want to be popular among the young people, because that's the future of technology, right?
And so then you add in things like their AR glasses and the AR technology suite that they have that we've talked about a few times. And there's a lot of reason for optimism. And now we're starting to see that, not only in the share price, but also in operations. So they recently reported earnings and I think there's just some interesting numbers to take out of their earnings report to just show the momentum that they have right now, because it kind of goes the opposite direction of what we see at Facebook.
So revenue is -- they always have this annual dip in the first quarter because of ad spending during the holidays. But you see, up 38% for the year, so really good numbers there. The other thing is daily active users continues to rise, up 18%. So we're seeing Facebook with flat users, user base. Now they've got, what is it? 2.2 billion users or something like that. So there's probably a limit on how much you can grow, but this is a company that's growing. Compare to like, Twitter, which is not growing nearly as much as well. So that's a really strong trend for them. And this is the number that, I think, when you pull back and look at their revenue per user over time, a decade ago they generated very, very little revenue per user. And they have just ratcheted that up, year after year. Up 17% overall. Up 31% in North America over the last year. And you're just seeing continued growth in that revenue per user. And their cost of revenue per user is dropping, so their margins are going up as a result.
So there's a lot to like from this company from an operational perspective, and I like where they're going from a technology perspective. I think AR is going to be a big piece of the future. They are at least a tech leader. I don't know exactly, you know -- this space is so early that there's a bunch of business models that companies are trying out, but if you have the tech and you have the user base, that's a great position to be in. Still a company I like, a stock that I own as well. And you know, in social media it's actually one of the best performers right now. So, really good numbers from them.
