Snap is TikTok’s older cousin who just came back from living abroad for a couple years and now looks…pretty hot.
The social media company’s stock catapulted nearly 25% the day after reporting its biggest growth quarter in four years. Daily active users climbed to 293 million in the second quarter, up 23% annually. Revenue more than doubled to $982 million, which was way above analysts’ estimates.
In short, it’s “hard to see anything that’s not firing on all cylinders,” Bernstein tech analyst Mark Shmulik said.
- Lockdowns ending: Posting on Snap is way more fun when you can travel and brag about it to your friends. In a previous earnings report, CEO Evan Spiegel said that easing Covid restrictions boosted Story posting and engagement with Snap Map.
- Strong advertising performance: Snap’s improvements to its ad offerings, paired with more brands putting money into digital ads during the pandemic, has meant advertisers are willing to pay more for placement on its platforms. That’s translated into mega revenue growth.
- No poison from Apple: Snap said that the rollout of Apple’s iOS 14.5 privacy update did not impact it as much as expected.
They’re going through changes
Social media companies are evolving as they transition from youth to middle-age. Snap has invested heavily in augmented reality and commerce—it wants you to shop online and “try on” clothing using its platform. Twitter, which also reported a stellar quarter Thursday, has introduced live audio, newsletters, and tip jars. Facebook’s goal is to become a “metaverse company,” which we’re not even sure Zuck knows the meaning of but we’ll be eager observers.
Platforms are also responding to the emerging power of “creators” to pull in users, exemplified by the success of TikTok. At one point Snap was doling out $1 million per day to creators on its TikTok-clone Spotlight, and Facebook is paying $1 billion to creators through 2022.