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Snap’s Four Secrets of Super-Specialness

Snap’s Four Secrets of Super-Specialness

Saturday, 24 July, 2021 - 05:00

Snap Inc. is proving itself to be a cut above the rest. Its latest results show why.


The social-media company reported second-quarter earnings late Thursday that crushed Wall Street’s expectations. Revenue in the period surged 116% from a year earlier to $982 million, handily beating the Bloomberg consensus estimate of $847 million. Snap’s daily active users jumped by 23%, also ahead of forecasts, and the stock soaring 18% in after-hours trading. Investors are right to cheer. This is truly impressive growth for a company that is well past its upstart days and now approaching $100 billion in market value.


What makes Snap so special? First, there’s the magnitude of its sales gains. As we go through this earnings season, I doubt we’ll see any other internet companies of its size posting similar triple-digit growth rates. The same applies for its user numbers: While Twitter Inc.’s US user base declined from the prior quarter, Snap added users in all geographies.


Another positive: even as smartphone giant Apple Inc. rolled out new privacy features during the quarter that let users block apps from tracking their activities, Snap said fewer users are opting out relative to the rest of the industry. Analysts had worried the change would significantly hurt digital advertisers’ ability to effectively target ads, but Snap’s resilience is a sign of the trust its community has in the company.


Most important, it’s Snap’s unique products that truly set the company apart, including augmented-reality tools that let app developers and brands superimpose digital content over real-world images. Snap says more than 200 million users engage with AR on a daily basis with more than 200,000 creators making AR experiences. Corporations are enthusiastic about Snap's AR software and creation tools. On its most recent earnings call, Nike Inc.’s chief executive said the company had remarkable success with its Snap AR campaign, adding that it generated more than 600 million impressions with users during the first two weeks. There is no doubt Snap will be on the forefront of capitalizing on the promising innovation as it becomes more prevalent in the coming years.


Of course, all of the internet ad players are benefiting from the broad-based economic recovery. But unlike most of its rivals, Snap never stumbled during the pandemic ad slump, posting steady revenue increases throughout. Even with Snap shares at a new high, the crackling earnings show why it deserves the stock pop.


Bloomberg


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