Snap Inc. (NASDAQ: SNAP) announced earnings recently. They were better than expected. The stock rose a breathtaking 28% to $14.55. However, over the past five years, they are down 49%. The S&P 500 is up 23% in the same period. Shares of much larger rival Meta Platforms Inc. (NASDAQ: META) are up 121%. Just a few months ago, worry about Snap’s prospects cratered its shares.
Snap has a problem in the social media world: It is too small to matter. Some people disagree. They believe that, although small, Snap has discovered ways to attract more advertising dollars, which are at the heart of its revenue. “Years of diligent work are beginning to pay off for Snap’s ad business,” said Max Willens, senior analyst at Emarketer, to Yahoo! Finance.
Snap’s revenue rose 21% in the most recent quarter to $1.2 billion. However, it lost $333 million, up 9% from the same period the year before. Evan Spiegel, CEO, described the cause for the improvement. “The value we provide our community and advertising partners has translated into improved financial performance.” Snap did have one very good piece of news. Daily active users (DAU) rose 10% to 422 million.
Meta, Facebook’s owner, released disappointing earnings days before Snap did. However, they showed how small Snap is and that its growth rate is not impressive. Meta revenue rose 27% to $36.5 billion. Net income rose 117% to $12.4 billion. Family daily active people (DAP) rose 7.7% to an average of 3.24 billion in March.
Snap is not a social media player of any consequence. So, its comeback doesn’t matter either.
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