Snap shares surge 35 per cent after app redesign sparks user growth

The company's Q4 revenue jumped 72 percent year-over-year, while Snap's full year revenue was up at $824.9 million, increasing 104 percent year-over-year.

The new feature should come in handy for users who want to stop receiving notifications from certain friends, but do not want to sever connections with them on the app.

For Q3, Snap reported 178 million daily active users (DAUs) vs. the 181.8 million expected by analysts.

It accomplished both feats while losing less money than expected. Snap's executives chalked it up in part to moderating headcount and not buying back employees' shares during the quarter.

"We decoupled the redesign from a lot of the future development that we've been working on, so that's continued and I'm very excited about the product pipeline for this year", Spiegel said in Tuesday's conference call. Year-to-date, SNAP has declined -3.76%, versus a 0.85% rise in the benchmark S&P 500 index during the same period.

This suggests that the redesign of Snapchat that was unveiled in November by Snap CEO Evan Spiegel is having the desired effect on investors. The figure surpassed analyst's expectations of 184.2 million users.

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The positive news sent shares of Snap soaring more than 23% in after-hours trading on Tuesday to $17.32, as investors showed renewed confidence in Snapchat's ability to add new users to help it compete with larger social media rivals like Facebook and Facebook-owned Instagram.

If Snap can make real revenue for media companies, they'll be more likely to partner with Snap on things like shows or stories down the line. In November, Snapchat unveiled a redesign that separated out peer-to-peer interaction and curated/professional content.

The Do Not Disturb feature, which has been present in Facebook Messenger and Apple's iMessage for years, comes after a few important additions to Snapchat. "More original content for Discover will only make the platform even more valuable as a complement to linear television, along with the ability to measure more on the platform".

Still, being a niche advertising platform, rather than a valid third player to Google and Facebook, is a rut Snap can't seem to extricate itself from. Wall Street, however, is looking for the company to report revenue of $253 million, up 52% from Q4 2016. Wall Street analysts had pegged Snapchat to add at most just 6 million new users during the last quarter of 2017. The lack of reach now offered by Snapchat, especially outside of North America, remains a limiting factor for marketers looking to leverage the platform's full potential.

Over the past year, Snap has made its flagship app easier for people to use, removing bugs in Snapchat's Android version and reducing its required bandwidth over cellular connections.

Snap, Inc. finally got a much needed turnaround and investors rejoiced. "A drop in quality takes users' attention elsewhere and Snapchat is now facing that challenge", Ben-Itzak said.

(Copyright © 2015. All Rights Reserved.)
 
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