Snap Shares Soar on Surprise Earnings Beat and Co-founders Net Over $2 Billion

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Shares of Snap Inc., the parent company of SnapChat were soaring over 20% in after-hours trading last Tuesday after it reported a surprise earnings beat for the third quarter.

It was an unexpected, adjusted profit along with positive user and revenue growth that had Wall Street cheering.

The company’s net loss for the quarter dropped to $200 million which is 12% lower than the $227 million reported last year. Daily active users at 249 million was a growth of 4% compared to the 238 million reported in July.

For the quarter Snap reported adjusted earnings per share: 1 cent vs. expected loss of 5 cents per Refinitiv. Revenue at $679 million was compared to an expectation of $555.9 million per Refinitiv. Global daily active users (DAUs) at 249 million was higher than the 244.12 million expected per FactSet. ARPU was $2.73 verssu the $2.27 anticipated per FactSet.

“The adoption of augmented reality is happening faster than we had previously anticipated, and we are working together as a team to execute on the many opportunities in front of us,” Snap CEO Evan Spiegel stated.

The company said it had used the quarter to engage with brands that were looking “to align their marketing efforts with platforms who share their corporate values.”

The third quarter coincided with the StopHateforProfit Facebook ad boycott where over 1,000 advertisers had paused their ads on Facebook in July.

“This gave us an opportunity to engage with advertisers and agencies in real time to ensure that our existing partners as well as new prospects understood our offering in relation to our values,” Snap Chief Business Officer Jeremi Gorman stated.

According to Snap chief financial officer Derek Andersen, the company expects to reach approximately 257 million DAUs in the fourth quarter, Andersen said. The company also anticipates year-over-year revenue growth of 47% to 50%.

“While there is continued uncertainty about the macro operating environment, we are pleased with the strength of the underlying momentum we have established with our advertising partners, and we remain highly optimistic about the long term prospects for our business,” Andersen said in prepared statements.

Both Evan Spiegel and Bobby Murphy, the co-founders of the company have earned $2.1 billion combined with the stock’s rally after earnings. As of last Friday, Murphy’s net worth reached $9 billion while Spiegel’s reached $8.4 billion.

The Snapchat creators are the second- and third-largest individual stockholders behind China’s Tencent. Murphy holds 7.32% of the company and Spiegel owns 4.4%.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.