Social Media Stocks Rally After Snap (NYSE: SNAP) Revenue Jump

Summary

• Social media stocks surged in post-market trading on Tuesday after Snap Inc posted its third quarter results.
• Shares of Snap Inc, Facebook, Pinterest, and Twitter rose noticeably after hours on Tuesday.
• Snap Inc posted a 52 per cent YoY growth in revenue in its Q3 2020 report.

Social media stocks began rallying during market afterhours on Tuesday, October 20, following the release of Snap Inc’s (NYSE:SNAP) third quarter financial results, which reflected growth. Shares of other social media companies such as Facebook (NASDAQ:FB), Pinterest (NYSE:PINS) and Twitter (NYSE:TWTR) rose noticeably, while Snap stocks surged about 20 per cent in post-market trading.

The coronavirus pandemic has boosted the demand of social media services a great deal this year. The increasing need to stay connected has made social media apps more of a necessity than ever before. This rise in demand reflected on the stock markets as well, resulting in a boom for the information technology sector. The tech-heavy Nasdaq Composite index on Wall Street is up by over 26 per cent year-to-date (YTD), while the TSX infotech index has gained 42 per cent in the same time frame. Let’s take a closer look at these stocks to understand their recent performances.

Snap Inc (NYSE: SNAP, SNAP:US)

Current Stock Price: US$ 28.45

Snap Inc’s 10-day average trading volume climbed to 13.5 million after its share price shot up on Tuesday during extended trading hours. The rise in its stock value came after Snap Inc posted a 52 per cent year-over-year (YoY) growth in revenue, a 28 per cent YoY improvement in its operating cash flow and a lowered net loss in its Q3 2020 report.

The California-based camera and social media company is the owner of the multimedia messaging platform SnapChat. It is also the developer behind smartglasses Spectacles and social media app Bitmoji. In its third quarter ending 30 September 2020, Snapchat garnered 249 million active daily users.

Snap’s YTD Performance / Source: Refinitiv, Thomson Reuters

Snap Inc stock registers a growth of nearly 70 per cent year-to-date. After dipping briefly during the pandemic-led March lows, its scrips climbed 120 per cent in the last six months and nearly 13 per cent in three months.

The company recently launched ‘Sounds on Snapchat’, to capture the market void that could be triggered by TikTok’s potential exit from the US.

Facebook Inc (NASDAQ:FB, FB:US)

Current Stock Exchange: US$ 267.5

Facebook Inc’s business boomed in the coronavirus times, recording 1.79 billion daily users on average in its second quarter 2020.

Facebook stocks are up nearly 28 per cent this year. Since dropping to a low of US$146 (on March 16) amid the pandemic-triggered market crash, the scrips registered a growth of 50 per cent in the last six months and nearly nine per cent in three months.

FB’s YTD Chart / Source: Refinitiv, Thomson Reuters

The Silicon Valley giant posted an impressive 98 per cent YoY surge in its net income of US$ 5.1 billion in the second quarter ending 30 June 2020. Its total revenue stood at US$ 18.7 billion, up 11 per cent YoY, in Q2 2020. Its income from operations was up 29 per cent YoY and its diluted earnings per share (EPS) was up 98 per cent in the latest quarter.

It is expected to release the financials of its third quarter 2020 on October 29.

Facebook is currently in a bit of a soup after the US Judiciary Committee released a research saying the tech giant, along with others like Google, Amazon and Apple, are guilty of ‘monopoly power misuse’.

Pinterest Inc (NYSE:PINS or PINS:US)

Current Stock Exchange: US$ 42.32

Popular virtual pinboard website Pinterest Inc boasted about gathering more than 400 million footprints on its platform on a monthly basis in its second quarter report. While over 60 per cent of its users comprise of women, Pinterest recorded a nearly 50 per cent YoY jump in its male users as of June 2020.

With a year-to-date growth of 141 per cent, Pinterest stock is currently outpacing major contemporaries in the social media sector, including Facebook and Snap. The scrips climbed about 160 per cent in the last six months and nearly 74 per cent in three months. It has a 10-day average share trading volume of 11.6 million.

Pinterest YTD Chart / Source: Refinitiv, Thomson Reuters

Pinterest’s revenue grew four per cent YoY to US$ 272 million in its second quarter ending 30 June 2020. Its adjusted EBITDA was up 30 per cent to US$ 33.9 million in Q2 2020, from US$ 26 million in Q2 2019. It also saw a net loss of US$ 101 million in the latest quarter, up 56 per cent YoY.

The company is set to release its third quarter results on October 28.

Pinterest announced on Tuesday the appointment of media sector veteran Salaam Coleman Smith to its Board of Directors.

Twitter Inc (NYSE:TWTR)

Current Stock Exchange: US$ 46.35

After the coronavirus pandemic forced offices to accommodate a work-from-home routine, Twitter was one of the first major tech companies to implement the remote workforce model indefinitely. It also added a new tab in its platform for easier access to COVID-related news.

Twitter stocks fell sharply during the March market crash, but has since recovered nearly 72 per cent in the last six months and almost 46 per cent YTD.

Twitter YTD Chart/ Source: Refinitiv, Thomson Reuters

The company also reported an increase of 34 per cent YoY in monetizable daily active usage and of 3 per cent YoY in ad engagements in the second quarter of 2020. However, its total revenue of US$ 683 million was down 19 per cent YoY.

The micro-blogging site is due to post its third quarterly results on October 29.