Snap shares climb more than 23% day after earnings beat

Snap shares climbed more than 23% on Friday morning, as the company continued to ride strong second-quarter earnings.

The company posted 293 million daily active users worldwide, compared to 290.3 million expected by StreetAccount. It’s also an increase of more than 23% from the 238 million daily users reported by the company the previous year.

The investors were encouraged by the strength of the users and their commitment. Snap’s ad growth was also a key driver, with concerns about potential Apple iOS privacy changes largely eased during the quarter.

Snap said the company is unaffected by the iOS 14.5 privacy changes, as it had expected. This was due to the later-than-expected rollout of the mobile operating system update, the slowness of iOS users to update their devices, and Snap’s observation of “higher signup rates. than those we typically see across the industry, which we believe is due in part to the trust our community has in our products and our business, ”said Jeremi Gorman, director of Snap, on Thursday.

“We have written a lot about the strength of the online advertising markets over the past 9 months … but even we have underestimated 2Q / 3Q results,” Morgan Stanley analysts wrote in a Friday note. .

“The strength of SNAP’s ad revenue was extended to all use cases (stories, discovery, lenses and AR, etc.) as performance-driven innovation like better match, dynamic product announcements and new AR lenses, results in increased advertiser growth and spend per advertiser. “, added the firm.

Wells Fargo analysts also noted the company’s large-scale growth and commitment.

“While the final impact remains uncertain, we are confident that SNAP will continue to run across its five key platforms (Stories, Camera, Spotlight, Map and Communications) with strong engagement trends ensuing amid innovation, improvement and adoption on multiple fronts (new announcement formats, AR tools, optimization, original content, games) with a broad track for monetization, ”the company said in a Friday memo.

Twitter also reported profit on Thursday, posting its fastest revenue growth since 2014. Twitter stock posted more modest gains on Friday, up about 1%. Snap and Twitter’s gains could bode well for Alphabet’s advertising segments, Facebook, Pinterest, and Amazon, all of which will report profits next week.

– Salvador Rodriguez and Michael Bloom of CNBC contributed to this report.

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