Snap Posts Quarterly Profit for the First Time, Analyst Says Much of Growth Likely Came From India
Investors are snapping up shares of Snap after the owner of the disappearing message platform Snapchat surprised Wall Street by posting a quarterly profit for the first time. The stock jump came Thursday after Facebook parent Meta saw its worst one-day stock price decline in its history, showing that while internet and social media companies are sometimes lumped together by Wall Street, their fortunes often diverge.
Shares of Snap were up $14.30 (roughly Rs. 1,000), or 58 percent, to $38.89 (roughly Rs. 2,900) in after-hours trading. The stock, which tends to be volatile, lost nearly 24 percent in the regular trading session following Meta’s plunge.
“Snapchat is clearly not as prone to the ‘TikTok effect’ as Meta, with strong daily active user growth in all regions, including North America,” said Insider Intelligence analyst Jasmine Enberg. She referred to the decline in user growth at Facebook that is in large part due to competition from TikTok, the popular video sharing app.
Even so, Enberg added, much of Snap’s growth likely came from India, where TikTok is banned.
Snap, which is based in Santa Monica, California, said Thursday its fourth-quarter profit was $22.6 million (roughly 170 crore), or 1 cent (roughly 75 paise) per share, compared to a loss of $69 million (roughly Rs. 500 crore), or 8 cents (roughly Rs. 6) per share, a year earlier. Analysts had been expecting it to report a loss of 9 cents (roughly Rs. 7) a share in the latest quarter, according to FactSet.
Revenue grew 42 percent to $1.3 billion (roughly Rs. 9,716 crore). Snap’s average daily user count also continued to increase, up 20 percent year-over-year to 319 million in the fourth quarter.