Snap Inc. (SNAP.N), the parent company of Snapchat, reported strong quarterly earnings on Tuesday, surpassing Wall Street expectations in both revenue and user growth. The company credited a resurgence in advertising interest to its improved ad-targeting capabilities, which have been bolstered by investments in machine learning. Following the earnings announcement, Snap also revealed plans for a share repurchase program of up to $500 million.
Snapchat’s quarterly performance comes as a win for the social media platform, which has historically faced challenges competing with larger social media players like Meta Platforms (META.O), the parent company of Facebook and Instagram. In response, Snap has focused on enhancing its advertising features to attract small- and medium-sized businesses, a move that appears to have paid off.
Despite an initial 8% drop in Snap’s share price in after-hours trading, investor sentiment quickly shifted, pushing shares up by 10% to $12.
Snapchat’s revenue relies predominantly on digital advertising, and the company has continued refining its ad offerings to lure back advertisers who had previously diverted budgets to rival platforms. These changes include improved targeting capabilities designed to maximize ad effectiveness for businesses, which has become increasingly crucial as competition in the social media advertising landscape grows.
With the recent results and share buyback announcement, Snap Inc. seems poised to strengthen its standing in the digital advertising market as it looks to build on this momentum in the coming quarters.
