The company's stock shot up by more than 27 percent in after-hours trading. Bank of America cut their price objective on shares of Snap from $17.00 to $16.00 and set a "neutral" rating for the company in a research report on Wednesday, November 8th. And while its user growth has slowed, the company hadn't made that a priority just yet.
The social networking company, known for its disappearing messages and popularity among teenagers, surprised Wall Street Tuesday when it announced better-than-expected sales of $285.7 million and a daily user count of about 187 million, 5 percent higher than the 178 million it counted in November previous year.
Overall revenue rose 72 percent to $285.7 million, beating analyst expectations of $253.2 million.
After struggling to grow its audience throughout the year, Snap unveiled a significant redesign in November meant to make its messaging service more intuitive to users. The company has demonstrated meteoric growth in users since 2014, quadrupling its user base since January 2014 from 46 million to 187 million. The more people it can get to use its app, the more enticing it becomes to its advertising customers, who need to reach a wide audience for their campaigns to be effective. However, engagement with content from publishers has actually grown, Spiegel said Tuesday: "In one of our first test markets, we saw that the number of Daily Active Users watching Publisher Stories on Discover grew by over 40 percent when compared to the old design of the application".More news: Shujaa to face Hamilton champs Fiji in Vegas
"This was a monster quarter relative to bearish expectations", analyst Daniel Ives of GBH Insights said, cautioning however that "competitive headwinds abound with Instagram front and centre". It "will be a tough pill to swallow for all the naysayers that threw in the white towel over the last few months".
When Snap first went public in March, 2017, shares sold for $24.48 a share, but they've declined steadily since.
It's been a year since Snap Inc filed for its IPO, and all told, it's been a tepid 12 months for the company.
Analysts at SunTrust Banks issued their FY2022 earnings estimates for Snap in a research report issued on Monday.