Stocks explode after huge gains, as earnings more than doubled

The social media company added 13 million average daily users sequentially over the period, bringing its total to 293 million. The FactSet consensus called for 10 million net additions.

Snap SNAP,
-0.66%
halved its losses, posting a net loss of $ 151.6 million, or 10 cents per share, from a loss of $ 326.0 million, or 23 cents per share, a year earlier.

After adjusting for stock-based compensation and other expenses, Snap surprised with a positive earnings per share of 10 cents, after posting a loss of 9 cents per share a year earlier. Analysts tracked by FactSet were expecting an adjusted loss of 1 cent per share.

“Our second quarter results reflect the overall strength of our business, as we have increased both revenue and daily active users at the highest rates we have achieved in the past four years. “CEO Evan Spiegel said in a statement.

Snap “has benefited from a favorable operating environment and continued success with both direct response and major brand advertisers,” added Chief Commercial Officer Jeremi Gorman during Snap’s earnings call.

While the entire social media industry had previously reported potential concerns about Apple Inc.’s AAPL,
+ 0.96%
Introducing transparency in app tracking, which allows consumers to not have their internet activities tracked for advertising purposes, Gorman noted that Snap has experienced “higher take-up rates than we typically see across the industry “.

Still, Apple’s feature rollout came later than expected, and users were slow to make software updates that would give them the ability to control tracking. “This has given us more time with advertisers to navigate the transition, but it also means that the effects of these changes will occur later than expected,” continued Gorman.

Social media peers Twitter Inc. TWTR,
+ 0.04%
also released bullish results on Thursday afternoon and its shares rose 5% after-market. Actions of the largest ad readers Facebook Inc. FB,
+1.43%
and Alphabet Inc. GOOGL,
+ 0.68%

GOOG,
+ 0.55%
increased by 3% and 1% respectively.

The profits come in the middle of a busy year for Snap, which has seen its stock rise 25% so far in 2021 as the S&P 500 SPX,
+ 0.20%
gained 16%. The company has capitalized on a resurgence of the advertising market, particularly compared to a quieter landscape at the start of the pandemic. It has also developed features beyond messaging which can generate more revenue.

Daily active users for Snap’s Spotlight service, which aggregates user-generated content, grew 49% sequentially in the quarter with average daily content submissions almost tripling, Spiegel shared during the call on Snap results. The company’s long history with full-screen vertical video can help Spotlight “go very easily to monetization,” he continued.

Snap has tried to dive deeper into the world of commerce and announced earlier this week that it has partnered with Verishop that will use augmented reality to help consumers explore different modes. Snap made several shopping-related acquisitions earlier this year.

“We continue to create value for businesses by rethinking the shopping experience through [augmented reality]”Spiegel said on the call.” By leveraging the long-term investments we’ve made in augmented reality and personalization, we are laying the groundwork for an enhanced online shopping experience. “

For the current quarter, Snap expects revenue of $ 1.070 billion to $ 1.085 billion. The FactSet consensus was $ 1.014 billion.