At long last, Snap Inc., Snapchat’s parent company, reported strong sales and user growth — and Wall Street is loving it.
Shares of Snap leaped 34 percent to about $18.80 a share in early morning trading on Wednesday, one day after the company reported its best quarter since going public last March. It’s the highest Snap has reached since June, with the the company spending the last seven months languishing below its $17 IPO price.
Snap pulled in about $30 million more in revenue than was expected, while adding 9 million daily active users — running past analyst estimates of about 6 million. Snapchat now has 187 million DAUs.
Another reason for investor enthusiasm is Snapchat’s redesign, which is continuing to be rolled out to select users. Searching Twitter for reactions often leads to unpleasant first impressions, but Wall Street is behind CEO Evan Spiegel’s plan to make the app “easier to use.”
“We are more optimistic on Snap’s redesign, which will fully roll-out in the first quarter. Snap’s new app redesign — more clearly separating social from media — has been pushed to 40 million users (of 187 million daily active users) with the remainder to come in the first quarter,” noted JP Morgan on Wednesday.
Wedbush analyst Michael Pachter also pointed out to TheWrap Snap is starting to make more money per user — and still has much room to grow. Snap pulled in more than $1.50 in average revenue per Snapchatter, a 36 percent quarter-over-quarter increase.
Maybe the hints of a good Q4 were there when Spiegel paid Drake to perform at the company’s holiday party.