Snap Inc. (NYSE: SNAP)
On Tuesday February 6th, 2018, Snap Inc. reported their fourth quarter earnings after the market closed for trading at 4 pm. As has been the case recently with companies that have beat Wall Street estimates, shares soared as soon as the news came out.
Shares, which closed the regular trading session at $14.06 which was up $0.21 on the day wound up closing up 21.41% at $17.07 or $3.01 as of 8 p.m. Eastern Standard Time. It is likely that the shares saw a huge increase on the news even though the company did not post preadjusted actual earnings, but merely beat loss expectations, there is a huge short interest in the outstanding share float.
That currently stands at 14.3% of outstanding shares sold short. This means a large number of shares have been sold before they have actually been purchased. It allows speculators to sell first and buy later hoping shares fall for them to buy back lower.
The company reported a loss of $350 million dollars or -$0.28 per share. This compares with losses of -0.20 cents per share in the year-ago period. However, after adjustments are made earnings came in at $0.13 per share.
Revenue’s rose tremendously from $165 million a year ago to $285 million this quarter. Analysts were expecting a loss of -$0.15 per share. This explains why the shares bolted much higher on the news.
The main reason given by the company for the stellar revenue numbers was the fact that daily active users have risen dramatically since the previous quarter.
Company & Analyst Comments
Chief Executive Officer Evan Spiegel had this to say to investors;
“Our business really came together towards the end of last year. We executed well on our 2017 plan to improve quality, performance, and automation, which removed friction from our advertising business and improved our application for the Snapchat community,”.
Analyst Daniel Ives of GBH Insights offered up these statements;
“This was a monster quarter relative to bearish expectations,” analyst Daniel Ives of GBH Insights said, cautioning however that “competitive headwinds abound with Instagram front and center.”
The above daily price chart shows SNAP shares going back to November of 2017. You can easily see the support line, the resistance line, and the area where the shares will likely open on Wednesday morning in the blue retangle area.
The yellow line is the 200 period daily moving average. That moving average usually indicates strong support or strong resistance. It is clear that SNAP shares will likely be opening way above that resistance moving average.
The above price chart shows the regular trading session on the left and the after-hours session on the right for SNAP. It is easy to see exactly when the earnings announcement was released, and shares soared higher. The price action went sideways to downwards slightly for an hour or two and then closed at $17.07.
Snap Inc. operates as a camera company. It offers Snapchat, a camera application that helps people to communicate through short videos and images.
The company also provides a suite of content tools for partners to build, edit, and publish snaps and attachments based on editorial content; and Spectacles, which are sunglasses that capture video from a human perspective.
The company was formerly known as Snapchat, Inc. and changed its name to Snap Inc. in September 2016. Snap Inc. was founded in 2010 and is headquartered in Venice, California. -YahooFinance