Snap investors are very happy this morning. At the time of this writing, the parent company of Snapchat is up a staggering 23% in early-morning trading. The stock has surged $6.61 to $35.02 before the bell. That’s an all-time high. The stock surge is thanks to Snap’s Q3 earnings results, which the company released after the bell last night.
In an era when TikTok seems to have dethroned even Facebook as the hottest social media platform out there, what is Snapchat doing right that’s spurred this stock surge? Basically, Q3 saw Snap blow past analyst expectations on virtually every metric that matters, including:
- Increasing revenue a staggering 52% YOY to $679 million
- Seeing daily active users grow 18% YOY to 249 million
- Seeing users create 25% more daily Snaps YOY
So, why did Snap see such good results in Q3? The company credits a strengthening of its ad platform, which brought in the increased revenue. But for as far as what drove that user growth, which underlined that ad revenue, the company specifically called out the popularity of its Lens Studio, which enables creators to make augmented reality lenses that users use in Snaps. Matter of fact, their “Anime Style” Lens was engaged with 3 billion times in its first week alone.
The company also made a dig at Facebook when its chief business officer Jeremi Gorman said, “As brands and other organizations used this period of uncertainty as an opportunity to evaluate their advertising spend, we saw many brands look to align their marketing efforts with platforms who share their corporate values.” This statement likely references the ad boycott Facebook experienced over the summer due to the company’s insufficient policies on hate speech.
Other factors for the stellar quarter include a 50% increase in Snapchatters in India watching Discover content, as well as the popularity of such Discover content including a show exploring racial issues with Jaden Smith and a docuseries featuring Conor McGregor.
Yet despite its blowout quarter, Snap decided not to release Q4 forecasts. However, such a move has been common this year with many companies due to the economic uncertainty around the COVID-19 pandemic. Regardless, as of this morning, many investors seeing that 20-plus percent surge in the value of Snap stock probably aren’t too concerned with the company’s Q4 anyway.