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Home / Business / Snap storage stops that Snapchat users stop defective, but many problems remain

Snap storage stops that Snapchat users stop defective, but many problems remain



After several months of bad news at Snap Inc., Snapchat's fourth-quarter results sent the offended stock market, with a profit of more than 20% in retrospective trading on Tuesday.

Sound known? It should be because we played this game last year at the same time as Snap

SNAP, + 1.59%

share added nearly 50% in a single session to exceed its IPO price for the first time in months. The problems Snap faces have changed little in that year, but Snap Stock has no chance of approaching the IPO award this time.

In Tuesday's earnings report, Snap said that the daily average user count came to 1

86 million, even with the previous quarter, and executives said they did not predict a sequential decline in the next quarter. It is considered progress for Snap after the user base has shrunk in previous quarters.

The company also managed to increase revenue per user, to $ 2.09 from $ 1.53 in the period ago, when Snap added new advertisers and increased prices for one per view. In addition, CEO Evan Spiegel said the revenue of 2018 increased by 43%, "was profitable within reach."

"We have worked hard to develop our team and culture in 2018," Spiegel said in prepared remarks. "The transitions we made in both the Snapchat platform and our operations last year were necessary and created many of the opportunities we have in front of us, but change is always difficult and the last year was no exception."

But not many analysts really teased down on the latest joy of bad news, including a number of leading departures, such as finance director Tim Stone, who lasted less than nine months. Snap still has many issues going forward, such as trying to get users older than 35 to join the platform and expand its enhanced Android version of Snapchat, which currently keeps users on lower smartphones away. But no exact time frame was specified for that rollout.

Leaders also talked about ways they run on efficiency, such as lowering the cost of infrastructure with thousands of dollars by re-engineering bandwidth usage on Snapchat.

"While we were impressed with the company's ability to demonstrate cost control and maintain revenue growth, we would not be surprised if similarly last year, this rally is finally failed," wrote Anthony DiClemente, an Evercore ISI analyst in a note late Tuesday. "The simple reality is that the path to GAAP profitability remains unclear, the user path remains more or less flat, and the company continues to burn through about $ 150 million in cash per quarter."

Leaders refused to give much guidance on user growth, a problem that has plagued Twitter Inc.

TWTR, + 1.27%

this year. Nevertheless, investors seemed somewhat pacified by a statement that Snap managers did not anticipate further losses in daily active users (DAUs) in the next quarter. Wall Street was looking for Snap to show a small contiguous decline in DAU, according to Factset, to $ 185 million before Tuesday's earnings.

Read more about What Snap was expected to record in the income statement.

Investors were clearly preoccupied with the results, with Snap's shares rising to around $ 8.45 in retrospect, but the stock is still far from the IPO price of $ 17. Snap still a lot to prove.

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