Snap Inc. (SNAP, Financial) saw its share price leap by nearly 60% on Friday on the heels of released financial results for the fourth quarter and full year ended Dec. 31, 2021.
The Santa Monica, California-based social media company enjoyed its first-ever quarterly profit as 2021 came to an end.
The company’s stock had been rattled on Wednesday after Meta Platforms (FB, Financial) revealed it would have to endure a $10 billion revenue loss this year due to software changes Apple (AAPL, Financial) made to ad tracking through its iOS software. Chief Financial Officer Derek Andersen told The Wall Street Journal that facets of Snap’s advertising business “began to recover from the impact of the iOS platform changes quicker than we anticipated.”
The stock finished Friday at $38.91, a gain of 58.82%, or $14.41 per share. It was a noteworthy comeback considering that trading on Thursday ended with its shares closing down 24%, its second-worst day ever. Analysts pointed fingers at investors scurrying away from social media stocks in the wake of Facebook’s Wednesday problems.
Snap, known as Snapchat Inc. until it changed its name in September 2016, offers Snapchat, a camera application with functionalities, such as camera, communication, Snap Map, stories and spotlight that enable people to communicate through short videos and images. It also provides Spectacles, an eyewear product that connects with Snapchat and captures video from a human perspective; and advertising products, including augmented reality and Snap ads.
“2021 was an exciting year for Snap, and we made significant progress growing our business and serving our global community,” CEO Evan Spiegel said in a statement. “The strength of our core business has enabled us to accelerate our investments in augmented reality, transforming the way that the Snapchat community experiences the world through our camera.”
Revenue increased 64% to $4.1 billion in 2021, compared to the prior year, the company said. Net loss improved 48% to $488 million. Last year was also the second consecutive year of positive adjusted Ebitda with $617 million in 2021, and the first full year of positive operating cash flow and free cash flow of $293 million and $223 million.
For the fourth quarter, revenue increased 42% to $1.3 billion compared to the prior year, according to executives. It was the first quarter of positive net income as a public company at $23 million. Adjusted Ebitda improved 97% to $327 million compared to 2020. Operating cash flow was $186 million, compared to $53 million in the prior year. The number of daily active users expanded by 20% year over year during 2021’s final quarter to 319 million.
For the first quarter of 2022, management is estimating revenue between $1.03 billion and $1.08 billion. Adjusted Ebitda is estimated to be approximately breakeven.
The result come as a pleasant surprise for some. The stock had closed down 24% on Thursday “after investors panicked following the weak outlook from Facebook ‘s parent Meta Platforms,” Barron’s reported. “Meta’s fourth-quarter report and outlook slammed social media stocks broadly, since they signaled near-term weakness in the digital ad market.”
Perspective, however, is important. Snap is still down year to date, with its stock down 47% since the start of the year when it closed on Thursday. In fact, CNBC suggested Snap “still has a long way to go to recover from the sell-off over the past several months." At midday on Friday, it was trading around $37, well below its 52-week high of $83.11.
