Snap surges above its IPO price after its big earnings beat

Snap surges above its IPO price after its big earnings beat

The company reported fourth-quarter results as Wall Street was looking for signs of life from an app that struggled at points previous year.

To make its app more friendly to users and advertisers, Snap launched a redesigned app in November, splitting "friends" from content feeds. Snap lost $443 million last quarter, nearly the same amount it lost in Q2 and up considerably from the $124 million it lost in Q3 the year prior. Twitter's expense of $600 million in 2013 was slightly less than its revenue, while LinkedIn had just a $30 million expense and $522 million in sales in 2011, the year it debuted on the market. In the last quarter, Snap lost $443 million, up from the $124 million it lost in Q3 2016.

Users - the thing most investors care about - were also way up for Snapchat, with the company adding 9 million daily users to hit 187 million.

The report, Snap's first annual earnings disclosure since it went public last March, marks the end of a bumpy year for the seven-year-old company. This gave investors hope, as they thought that a big change in the app might give it the boost of energy required to regain the user growth rates it once enjoyed. Then it showed off that redesign to the media later that month. "We're willing to take that risk for what we believe are substantial long-term benefits to our business", he said at the time. He also cited improvements to the company's Android app as part of the reason DAU numbers have risen, saying "people who try Snapchat on Android are much more likely to stick around and become Daily Active Users".

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Q4 2017 earnings beat Wall Street estimates, a first for the company and a much-needed break for the financial side of a company that's struggled to make money despite being a technological success. Previously, Snap made a bet on hardware - its Spectacles - but ended up losing $40 million on the video-recording sunglasses last quarter when they proved to be far less popular than expected. Following the sale, the chief executive officer now owns 86,657,812 shares in the company, valued at approximately $1,076,290,025.04.

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Options are pointing to a double-digit move in the shares, with $15 puts and calls the most widely held options.