Snap Inc (SNAP), the parent company of Snapchat, reported first quarter earnings on Tuesday that narrowed from a year ago, beating Wall Street’s expectations and sending the stock on a tear.
The company reported a loss of 10 cents per share, compared with a 17 cent share loss in the comparable year-ago quarter.
Revenues were $320.4 million, compared with $230.7 million in the first quarter of 2018. Analysts, on average, expected the photo sharing app to post a 12 cent loss on revenues of $307.44 million.
The stock jumped by nearly 10% in after-hours trading before retracing those gains. During Tuesday’s trading session, a big rally added 4% during the trading day. Snap’s stock closed the session at $11.99.
In the wake of an Android application update, Wall Street expected to see a recovery in the number of Snapchat users.
The company said that daily active users (DAUs) were 190 million in the first quarter, up from the fourth quarter of 2018 but down slightly from the comparable year-ago quarter. Snap defines DAUs as a registered user who opens the application at least once per day.
“The new app is 25% smaller, opens 20% faster on average, and is modularized for more efficient ongoing innovation,” Snap said in a statement.
“On lower-performing devices, this resulted in a 6% increase in the number of users sending Snaps within the first week of upgrading” to the new Android platform, Snap added.
Earlier Tuesday, Twitter (TWTR) heightened expectations with a first quarter earnings report that blew past Wall Street’s expectations, and highlighted big gains in daily users, a key metric watched by analysts.
For the upcoming quarter, Snap said it expects revenue to rise to between $335 million and $360 million, representing growth of 28% to 37%, from the comparable year-ago period.
Calling Snapchat “a scarce asset that offers advertisers access to a coveted younger demographic,” analysts at Credit Suisse on Tuesday recommended investors buy the stock, with a target of $13 per share.