Snap Projects 50% Annual Revenue Growth for Next Several Years, Stock Hits All-Time High

CEO Evan Spiegel summed up Snap's approach at the start of the presentation: "Our strategy is to take product innovations like augmented reality lenses and evolve them into platforms by building tools for creators and developers and providing distribution for their creations to reach the Snapchat community,"
"[W]e are excited about the potential for Spotlight to further expand the supply of our highest yielding and most in demand advertising products in the future," Andersen said at the event.
The implication? smartphone users. Today, Snap has less than 2% share of the U.S. That the company has plenty of runway to grow. digital ad market, while Snapchat reaches nearly half of U.S.
CFO Derek Andersen said at the event that based on the monetization platform Snap has built and its product road map, "we can responsibly grow our topline revenue at 50% or better year over year for at least the next several years.”
“Longer term, we believe Snapchatters will engage naturally with businesses of all sizes across our service, whether through a brand’s profile, finding store hours on the Map, or interacting with products using an AR Lens,” said Jeremi Gorman, Snap's chief business officer.
The Snapchat app has five tabs — Camera, Map, Chat, Stories and Spotlight — and each of those areas are represent multibillion-dollar revenue streams over the long term, according to Andersen.
To date, Snap has localized content in nine different languages from nearly 500 partners in 17 countries around the world.” />
According to the company, Snapchat reached over 70% of those 13-24 in countries comprising over half the world's digital ad spend. Approximately 80% of the Snapchat user base is over the age of 18.
The surge pushed Snap's market cap over $100 billion, to stand at about $106 billion. On the upbeat forecast, Snap shares popped 11% for the day Tuesday, with the stock closing at an all-time high of $70.45 per share. The turnaround came after shares dropped nearly 10% earlier in the day.
Launched in late November, Snap had over 100 million monthly active users in January 2021. Meanwhile, even as others have copied Snapchat features, Snap itself has borrowed from TikTok with Spotlight, the user-generated content section in Snapchat. The company says it doles out more than $1 million daily to creators of the top-performing Spotlight videos.
Spiegel said that Snapchat Stories, despite "substantial competitive pressure" — referring to rivals like Instagram, Facebook and Twitter copying the format — has become its largest revenue stream.
UPDATED: At its first investor day conference, Snap outlined a bullish future for the Snapchat app — with senior execs saying they expect the company to generate 50% revenue growth over the next several years.
For the full year 2020, Snap revenue grew 46%, to $2.5 billion. Snap’s fourth-quarter 2020 results topped Wall Street earnings expectations, as Snapchat gained 16 million daily users to hit an average of 265 million for the quarter.
"We generate the vast majority of our revenue from Snap Ads inserted in between those Stories," he said. "And these ads allow our community to take direct actions by swiping or tapping, and they’ve become an important tool for direct response and brand advertisers."
Snap says its original short-form Shows are a critical piece of its growth in engagement. "As we continue to deepen our engagement, our available inventory of premium ad units has grown," he said. In 2020, total time spent watching Shows was up nearly 70% year-over-year, according to Andersen.

Leave a Comment

Your email address will not be published. Required fields are marked *