Snap, Crackle, And Pop

Snapchat flashes past investor expectations

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What's going on?

There was #nofilter on Snap Inc. the “camera company” behind photo app Snapchat on Tuesday as its second-quarter results flashed past investors expectations.

What does this mean?

Snaps revenue rose by more than investors expected, and while it still made a loss, it was smaller than forecast. The company grew its daily active snappers globally, thanks to a refreshed Android app released last quarter. Most analysts had recently increased their revenue forecasts but wrongly decreased their profit predictions they believed Snap could grow sales, but only by spending more than they initially thought. Perhaps Tuesdays update shouldnt have been surprising: over the last two years, Snaps earnings have exceeded expectations more often than not.

Snaps
forecast for this quarter was much higher than investors had anticipated so the company probably expects the 3.5 billion Snaps taken each day to rise further

Why should I care?

For markets: Snaps stock snapped up.
Snaps share price is still 12% below its 2017 debut price. But a series of better-than-expected updates this year have helped its stock rise over 160%. The companys currently worth 11 times analysts average annual revenue forecast compared to Facebooks eight and Twitters seven. Unlike Facebook and Twitter, however, Snap is still a way off being profitable. Investors are now likely to increase their predictions for Snaps future earnings, better justifying a valuation thats (relatively) high and judging by the 11% rise in its share price late on Tuesday on an upward trajectory.

Zooming out: This old dog could teach them new tricks.
Coca-Cola, the stock market veteran that makes Snap look like a whippersnapper, reported second-quarter results on Tuesday that sent its stock fizzing 6% higher. Like arch-nemesis PepsiCo, it’s suffering from falling soda sales Stateside as consumers opt for healthier options. But Cokes sales outside the US helped it exceed profit predictions and encouraged it to raise its sales forecast for the rest of the year, leaving investors decidedly bubbly.

Originally posted as part of the Finimize daily email.

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