Snapchat

What’s going on?

All eyes were on Snap Inc. and Twitter late last week, as the social media giants’ digital ad businesses drove quarterly earnings that blew past expectations.

What does this mean?

Here’s something to make you feel old: 293 million people were using Snapchat – Snapchatting? Snapping? – on an average day last quarter, up nearly 5% from the quarter before. It’s these users Snap sells to an advertising market that’s in fine form compared to the same time last year, so it stands to reason that the company saw its revenue more than double from back then.

Twitter likewise benefited from the resurgent ad market, and the company saw its revenue climb a better-than-expected 74% versus the same period last year – its biggest jump since 2014 (tweet this). The company also made revenue forecasts for this quarter that were higher than expected, which might have something to do with the company’s recently launched subscription service, Twitter Blue.

Why should I care?

For markets: Investors have heard enough.
If investors took one thing from both companies’ announcements, it’s that digital ad spending is back in full swing. So while Snap and Twitter’s stock prices initially jumped 15% and 5% respectively on Friday, its ad-dependent rivals have reaped the rewards before they’ve even arrived at their updates: investors sent Facebook and Google-parent Alphabet’s shares higher on Friday.

The bigger picture: Apple hasn’t killed the digital ad star.
It’s not just the pandemic that’s upended the digital ad market: Apple’s recent privacy changes have made it much harder to match the right ads to the right users. But both Snap and Twitter said the impact was actually lower than they’d anticipated, primarily because iOS users have either been slow to update their devices or surprisingly willing to opt in to ad tracking. That should help reassure investors’ that Apple’s meddling hasn’t caused irreparable damage to the digital ad market.

For information purposes only, not intended to constitute financial advice from us. The customer should assess the risk of  potential loss carefully and individually before investing in any financial products. Dabbl Group Limited is authorised by the FCA under the reference numbers 767263 as an appointed representative of its Principal firm VIBHS Financial Ltd, which is authorised and regulated by the Financial Conduct Authority under the reference number 613381.

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