Snap Inc.'s share price soared more than 26 percent to as high as $17.80 a share in after-hours trading Tues., Feb. 6 after the Snapchat developer posted revenue for the quarter ended December 31 that beat stock analysts' expectations.
Snapchat paid its publishing partners "more than $100 million" in revenue-sharing advertising deals a year ago, up from $58 million in 2016 and just $10 million in 2015, the company reported on Tuesday. At its current burn rate, Snap barely has enough money left to survive 2018, so the company will need to raise more funding or start making money - preferably both.
Almost a year after Snap's March IPO, analysts and investors have been watching to see if Snap can boost user growth amid competition from larger rival Instagram, which has added photo filters and other Snapchat-mimicking features. Shares were trading up more than 25 percent after hours. The company's full-year net loss swelled to $3.4bn.
Investors, who had been expecting revenue of $255 million and a loss of 33 cents per share, sent the stock soaring on the strong earnings beat.
"Our business really came together towards the end of previous year and I am very proud of our team for working hard to deliver these results", said founder and chief executive Evan Spiegel. If the gains hold, Snap's stock could open above its IPO price of $17 a share for the first time since July.
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"Our business really came together toward the end of past year", Evan Spiegel, the cofounder and CEO of Snap, said on a conference call with analysts Tuesday.
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Snapchat has finally made investor concerns disappear.
When Snap first went public in March, 2017, shares sold for $24.48 a share, but they've declined steadily since. The sales boost represented a 72 percent year-over-year increase.
"We ended 2017 confident that we can grow our Snapchat community and monetize our products more efficiently than ever before", Spiegel said.