Snap shares jumped 30% Friday after the company reported improved sales and a big increase in premium subscribers.
The Snapchat parent company said its number of daily active users moved up 10% to 422 million in the first quarter from last year, and Snapchat+ subscribers more than tripled. The social media platform’s first quarter revenue totaled just over $1 billion, up more than 20% from the prior year, a positive sign that prompted bullish analysts to raise their price outlooks to between $16 and $19.
Jefferies’ James Heaney, for example, sees Snap’s shares hitting the top of that range, forecasting that the company’s good fortunes will continue in the second quarter due to increases in its ad revenue. “We were impressed by the broad-based strength of the business,” he said in a note to investors Friday. Meanwhile, other analysts note that a TikTok ban would also help Snapchat.
Still, Snap is a money-losing company. While its losses have shrunk, they still totaled more than $300 million during the three months ended March 31. And the platform’s stock price remains well below its high of about $80 in late 2021. This volatility left some Wall Street analysts skeptical that its good fortunes will continue at their current rate.
JPMorgan’s Doug Anmuth, for example, maintained his view that investors should sell the stock based on his view that the company will see a second quarter slowdown. “Snap’s results have historically been choppy, and we are hesitant to extrapolate from one quarter of strong results,” he wrote in an analyst note, although he raised his price outlook for Snap shares from $11 to $13. Bank of America analysts remained skeptical, too, giving the stock a neutral rating due to the company’s ongoing issues to monetize its platform and “flattish” user growth.
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