This is Why Snap Shares Just Hit a Record

Shares of Snap Inc., the parent company behind popular social media picture taking app Snap Chat, were soaring this week to a record high of $73.59.

The stock popped after the social media company had forecast revenue growth of 50% or more for several years.

The company is “in a position to drive multiple years of 50%-plus revenue growth,” said Peter Sellis, senior product director, in a presentation at Snap’s first-ever investor day on Tuesday.

Snap has built out its self-serve advertisement ecosystem that has driven cost per impression for Snap while driving return on investment for advertisers, Sellis said.
“The more advertisers we have, the more diverse the set of ads that we can show,” Sellis added. “That makes these ads more relevant and it makes Snapchatters more likely to engage with them. This in turn drives higher ROI and makes us more efficient with our inventory.”

At the event, executives outlined a vision for how the company will boost its audience while maintaining user privacy and trust.

“It is augmented reality that is driving our future,” Chief Executive Officer Evan Spiegel said. “We are doubling down on this strategy in 2021.”

Analysts, on average, project sales will rise 48% to $3.72 billion this year, according to data compiled by Bloomberg. Snap’s growth is estimated to be 37% for 2022 and 33% for 2023.

According to Snap Chief Financial Officer Derek Andersen, the company expects operating expenses to increase from a roughly 25% year-over-year growth rate in 2020 to a percentage rate in the “mid-30s in 2021.”

“While our investment levels will be higher in the coming year, we remain committed to sustained full-year adjusted Ebitda profitability, and continued financial progress over time,” Andersen said.

Shares of Snap have gained over 40% this year so far.

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