Snap Stock Surges on Q4 Earnings Beat and User Growth

Snap Inc., the parent company of popular messaging app Snapchat, reported better-than-expected fourth-quarter results, sending its stock soaring in extended trading on Tuesday. The company's earnings per share and revenue both exceeded Wall Street's expectations, while its global daily active users (DAUs) and average revenue per user (ARPU) met analyst projections. Snap's stock jumped more than 10% in after-hours trading following the announcement.

Snapchat's user base continues to grow, with the app now boasting 453 million daily active users, up 9% year-over-year. This growth can be attributed to several key factors, including an increase in public content sharing, expansion of the Snap Star program, and improvements in the advertising platform. More than one billion Snaps were shared publicly on Snapchat every month in the fourth quarter, and the Snap Star program saw a 40% year-over-year increase in the number of creators posting content. Active advertisers more than doubled during the quarter, with improvements to the advertising platform driving improved advertiser performance.

Snap's advertising platform has been a significant driver of the company's revenue growth. In the fourth quarter, revenue increased 14% year-over-year to $1.56 billion, with the advertising platform contributing to this growth. The company's CEO, Evan Spiegel, attributed the revenue growth to the improvements made to the advertising platform, stating that they have driven improved advertiser performance. This suggests that the platform's enhancements have not only attracted more advertisers but also increased the effectiveness of their campaigns, leading to better results and higher spending.

Snapchat+ subscribers also grew during the quarter, with the service now having 14 million subscribers, up from the 12 million it reported during the third quarter. The service, which debuted in 2022, makes up the bulk of what Snap calls "other revenue." That unit grew 131% year-over-year in 2024 and has an annualized revenue run rate of well over $500 million. The continued growth of this service, along with the company's commitment to investing in its advertising platform, suggests that Snap's revenue growth prospects in this area remain strong.

Snap's user growth and advertising platform improvements have contributed to its overall revenue growth and stock performance. The company's stock has rallied in recent months, and its fourth-quarter results indicate that this trend may continue. However, investors should be cautious and monitor the company's progress closely, as the social media landscape is constantly evolving, and Snap's success depends on its ability to adapt and innovate.