photo app
Stock market celebrates first Snapchat profit after Facebook shock
The number of daily active Snapchat users increased from 306 to 319 million within three months. Photo: Jens Kalaene/dpa-Zentralbild/dpa
© dpa-infocom GmbH
After Facebook disappointed the stock market, shares in competitor Snap also fell. But the Snapchat operator convinced investors with its own numbers. Among other things, there was the first quarterly profit since the company was founded more than ten years ago.
One price drop and back: The creators of the photo app Snapchat experienced an extraordinary stock market roller coaster with a happy ending within a few hours.
First, frightened investors let the share collapse by 23.6 percent in the wake of the Facebook sell-off. But when the operating company Snap presented its own figures, the mood changed. The price jumped more than 59 percent in after-hours trading.
Snap convinced the skeptical investors, among other things, with the very first quarterly profit. The company posted a $22.5 million surplus for the past quarter, down from $113 million a year earlier. Snap is increasingly able to make investments in the future on its own, said co-founder and boss Evan Spiegel in an interview with analysts.
The number of daily active Snapchat users rose from 306 to 319 million within three months. In addition, Snap increased sales in the past quarter by 42 percent year-on-year to $1.3 billion. For the current quarter, Snap has announced sales of a good one billion dollars.
This was well received on the stock market: As a result of the turbulent day, Snap shares rose from $32.07 to $38.99 in after-hours trading.
Facebook: Decline in user numbers
The Facebook group Meta had lost more than a quarter of its value. The price drop was triggered by the first decline in the number of daily active Facebook users and investors’ disappointment with the sales forecast for the current quarter. Shares in Facebook competitors like Snap also fell under the wheels.
One of the reasons for this may have been that Snapchat, like Facebook, had suffered from Apple’s measures for more privacy on the iPhone in the past few months. Since the summer, app providers have had to explicitly ask iPhone users for permission if they want to track their behavior across different services for advertising purposes. Many people reject this – and this messes up the previous display models of the apps.
Snap never questioned Apple’s actions
Snap had already had to admit that advertisers could no longer assess the success of their campaigns in some ad categories. But now it was said that the situation was improving faster than expected in some areas. Among other things, Snap developed its own measurement tools for advertisers. Unlike Facebook, Snap had never questioned Apple’s actions despite the setbacks. Instead, Spiegel repeatedly described it as a correct step.
At the same time, Snapchat, like Facebook, is experiencing a change in user behavior. The use of so-called stories, in which users can make photos and videos visible to their friends for a day, has fallen.
Trending short videos
Facebook had copied the Stories format established by Snapchat in its apps, including Whatsapp. Founder and boss Mark Zuckerberg now referred to increasing competition from the video app Tiktok and also wants to focus more on short videos. Facebook’s Tiktok copy is called Reels, Snapchat imitates the service in its app under the name Spotlight. Recently, users have spent more time in Spotlight, said Spiegel.
After Snapchat was founded in 2011, it became popular with photos that disappeared on their own. Meanwhile, the app got a strong focus on so-called augmented reality, in which digital objects on the screen are combined with real environments. On the one hand, Snapchat is about fun applications, but the company also uses the technology for digital fittings on clothing or sunglasses.