Snap Shares Rise 4% Prior To Earnings Release

snap-share-rise-4%

On Wednesday, shares of Snap Inc rallied by 4.15% to $13.56 per share following comments from an analyst that the shares of the Snapchat parent company  is “getting interesting”. Aside from the comment, some analysts also believes that the company might deliver a slightly positive quarterly earnings report.

Snap shares which opened 45% during the launch of its IPO last March has since lost more than 50% prior to its rally on Wednesday. The company initially priced its IPO at $17 per share at a valuation of around $19-$22 billion. Snapchat founder and chief executive officer Evan Spiegel then earned roughly $272 million during the initial public offering of their shares.

However, the company warned investors that the stock may not offer any profitability during the IPO’s early stages due to the company’s continuous spending and operations expansion along with losses of more than $500 million last 2016. However, investors have long awaited the company to launch its IPO following Twitter’s launch back in 2013.

Last month, Snap shares traded below its IPO price of $17 per share for the first time since its launch losing around 1.1%. The company then continuously received analyst downgrade due to the weak outlook regarding the company’s growth who has been continuously facing competition from other social-media networking sites such as Facebook and Instagram who has rolled out their own disappearing photo and video feature.

By May, Snap shares have plunged by almost 25% due to a disappointing earnings report. While Snapchat’s daily users rose by almost 36% from the previous year to around 166 million users, it paled in comparison with Facebook’s users of more than 500 million.

The company’s earnings report revealed that Snap Inc was able to accumulate a loss of $2.2 billion due to their IPO launch expenses but a considerably higher revenue for their first quarter  at $149.65 million compared to their revenue of $38.8 million from the same period a year ago. It posted losses of $2.13 per share and earning roughly $0.90 per user.

Despite the setback in Snap Inc’s stock, the company is still widely optimistic as it believes that its recent acquisitions and expansion efforts will pay off in advertising revenue. Huge companies still also believe that Snapchat offers more appeal to viewers rather than Facebook and Instagram stories.

For the second quarter, investors are expecting a revenue of $189.3 million up from their revenue for the same period last year at $149.6 million. Aside from the company’s revenue, investors will also be looking at Snap Inc’s growth numbers and a positive sign that it can challenge Facebook.

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