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A day after launch event, Snap stock continues to rally

Extending the ongoing recovery from the recent lows, shares of Snap Inc. (SNAP) traded sharply higher on Friday, a day after the company unveiled an array of new products. Snap expects the new products to keep advertisers and users engaged on the company’s platform while catalyzing its transformation from messaging app to a full-fledged media firm.

As part of exploring new revenue opportunities, the company rolled out several new products this week, of which the gaming platform and advertising network caught the attention of the market. Meanwhile, s section of market watchers remains skeptical about the ability of the new products to drive revenue growth for the company.

Considering the deepening crisis at Snap and its shrinking market cap, investors might not settle for anything less than a prudent strategy that helps the company recover from the losses.  There are others who speculate that the steady improvement in market value this year will continue in the coming months and help the company return to profitability.

Considering the rapid depletion of Snap’s market cap, investors might not settle for anything less than a prudent turnaround strategy

By launching the gaming platform, the management aims to attract the young population, which is increasingly being lured by the popular titles of game developers like Electronic Arts (EA) and Activision Blizzard (ATVI).

In the fourth quarter, Snap’s daily active users remained broadly unchanged year-on-year at $186 million. The company posted a narrower net loss of $0.04 per share for the three-month period on a 36% growth in revenues to $390 million. Both the numbers topped the estimates.

Also see: Snap Inc. Q4 2018 Earnings Conference Call Transcript

Earlier, Snap CEO Evan Spiegel had claimed that the company is ‘substantially’ closer to achieving profitability, aided by its revamped cost structure and improved revenue performance.

Raising hopes of a near-term turnaround, Snap shares nearly doubled so far this year after slipping to an all-time low in the final weeks of 2018. The stock gained 5% in the early trading hours of Friday. Over the past twelve months, it dropped about 17%.

 

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