Snap Inc (NYSE: SNAP) nixes iPhone privacy fears - answer to Meta woes?

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 Snap Inc (NYSE: SNAP) nixes iPhone privacy fears - answer to Meta woes?
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Highlights

  • Snap Inc forecasts revenue of US$1.03 billion to US$1.08 billion in Q1, FY22.
  • It expects daily active users to be in the range of 328 million to 330 million.
  • The company reported its first positive net income since its IPO in March 2017.

A big part of Snap Inc’s (NYSE: SNAP) better-than-expected fourth-quarter result has come from its ability to bypass the iPhone privacy wall that riled companies like Meta Platforms Inc (FB), whose ad revenue saw a massive hit in the December quarter.

Snap Inc Chief Financial Officer Derek Andersen said the company's ad clients shifted to a new measurement tool to evade Apple's privacy changes which yielded incredible results. He added that the tool helped the ad business bounce back from the impact faster than expected. 

Snap’s success may have presented a readymade answer to Meta Platform Inc’s (FB) troubles. The Facebook stock plunged more than 26% in the extended hours trading on Wednesday after providing weak guidance on account of iPhone privacy changes.

The biggest single-day stock rout wiped out roughly US$200 billion in its market value. The California-based company said its quarterly ad revenue was hit due to the privacy wall.

On the other hand, Snap Inc has raised its first-quarter guidance that topped analysts' estimates.

The SNAP stock rallied over 46% in the premarket trading on Friday.

Snap’s quarterly performance comes as a relief in the tech industry after the jolt caused by Meta Platforms. The camera and social media company on Thursday said it effectively dealt with the privacy policy concerns.

Apple's new privacy updates, which came into force last year, allows users to block ads from third-party sources. The social media companies bore the brunt of Apple’s action. Meta Inc said Apple's privacy changes could lead to losses of US$10 billion in 2022. 

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The Santa Monica, California-based Snap Inc. expects its first-quarter revenue to be between US$1.03 billion and US$1.08 billion, and the daily active users are expected to grow in the range of 328 million to 330 million, according to Rifinitive data.

On Thursday, social media company Pinterest, Inc. (NYSE: PINS) has also reported better-than-expected results. The PINS stock was up 12.65% to US$27.61 at 7:48 am ET on February 4.

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Snap reported first positive net income since it went public in March 2017.

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Snap Inc's Fourth Quarter FY21 Performance

Snap Inc's revenue surged US$1.3 billion in the quarter, an increase of 42% YoY, topping analysts' estimates. The daily active users surged 20% YoY to 319 million, contrasting Meta's monthly global users at 2.91 million in the same quarter.

Snap Inc also logged its first positive net income since it went public in March 2017. It reported earnings of US$22.5 million in the final quarter of 2021, against a loss of US$113 million in the comparable quarter of the previous year.

CFO Andersen further stressed in a prepared statement before the earnings call with analysts that the new ad measurement tool adopted by the company would help grow its ad business.

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Bottomline

Analysts see strong growth potential for Snap Inc in the competitive tech industry. Snap Inc is stepping up efforts to attract new users from Latin America, Europe, and Asia as part of its vision to accelerate global expansion by partnering with wireless carriers and augmenting VR.

 

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