Snap, the owner of the Snapchat app, posted excellent quarterly results. The company reduced its net loss in the second quarter of 2021 and more than doubled its revenue as the advertising market continues to recover. The company’s revenue in the second quarter was $ 982 million, compared with $ 454 million a year earlier. The indicator exceeded the consensus forecast of analysts at $ 846 million. Snap’s net loss in April-June decreased by 53% – to $ 151.6 million compared to $ 326 million in the same period last year. Loss on a per share basis declined to $ 0.1 from $ 0.23 on the average market forecast of $ 0.21.
Revenue and the number of daily active users grew at the highest rates in the past four years.The number of daily active users of Snapchat increased by 13 million users, to 293 million, while the forecast of growth by 10 million. According to the forecast of management, in the current quarter the company’s revenue will be $ 1.070-1.085 billion. The market consensus forecast for this metric is $ 1.014 billion. We believe the company’s revenue will continue to grow on the back of increased ad revenue and an average 7% annual user base growth over 2021–2026. We raise our target price for Snap from $ 90 to $ 96.
Snapchat is a mobile-only platform somewhere in between a social network and messaging service that has evolved since its debut in 2011. SNAP launched as a one to one ephemeral messaging service that allowed users to take and send disappearing photos, videos, etc. and has since expanded its offering along with its use cases to include (i) one to many sharing via Stories, (ii) content consumption via its Discover platform, in which partners such as ESPN and Cosmo create premium content for the platform, (iii) chat functionality including video and audio calls and group chat, and (iv) creative tools such as lenses and Geo filters, just to name a few.