Snap Delivers Stellar Q4 Results; Shares Skyrocket 59% After Hours

Shares of Snap, Inc. (SNAP) skyrocketed more than 59% in the extended trading session on Thursday after the company delivered stellar fourth-quarter results and upbeat guidance.

The stock crashed 23.6% in regular trading to close at $24.50 after Facebook’s parent Meta Platforms Inc. (FB) reported disappointing results, sending social network stocks spiraling down, wiping out billions of dollars of investor wealth.

However, Snap surpassed both earnings and revenue estimates by innovations and advancements across all of its segments, including augmented reality platform, content offerings, product and partner ecosystem, and advertiser offerings.

Stellar Results

Q4 marked the first quarter of positive net income ($23 million) since Snap’s listing in 2017. Adjusted earnings came in at $0.22 per share, up 135% compared to Q4FY20, and meaningfully outpaced Street estimates of $0.10 per share.

Moreover, Snap’s quarterly revenue jumped 42% year-over-year to $1.3 billion and also surpassed analyst estimates of $1.2 billion.

Notably, Snap’s Q4 Daily Active Users (DAUs) grew 20% year-over-year to 319 million, marking the fifth straight quarter of 20%+ growth in DAUs.  

For Fiscal 2021, adjusted earnings registered high triple-digit gains from the prior year’s loss of 6 cents per share and stood at $0.50 per share.

Similarly, Snap’s annual revenue rose a whopping 64% to $4.12 billion. 2021 marked the first full year of positive operating cash flow and free cash flow for the company.

CEO Comments

Delighted with the company’s performance, CEO Evan Spiegel said, “2021 was an exciting year for Snap and we made significant progress growing our business and serving our global community… The strength of our core business has enabled us to accelerate our investments in augmented reality, transforming the way that the Snapchat community experiences the world through our camera.”

Q1 Guidance

Based on the current momentum, Snap forecasts Q1 revenue between $1.03 – $1.08 billion, marginally better than the consensus estimate of $1.02 billion. Also, adjusted EBITDA is expected to break even during the quarter.

Analysts’ Take

Ahead of Snap’s earnings, KeyBanc analyst Justin Patterson significantly lowered the price target on the stock to $36 (46.9% upside potential) from $85 but maintained a Buy rating.

Overall, the stock commands a Strong Buy consensus rating based on 15 Buys and 5 Holds. The average Snap price target of $56.37 implies a whopping 130.1% upside potential to current levels. Shares have lost 51.3% over the past year.

Website Traffic

TipRanks’ Website Traffic tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into SNAP’s performance, which, according to TipRanks, is one of the best social media stocks.

In December, Snap’s website traffic recorded a significant 93.20% year-over-year increase in monthly visits. Likewise, year-to-date website traffic growth increased by 9.77% compared to the same period last year.

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