(Bloomberg) – Snap Inc.’s stock jumped to a record high, reversing an earlier drop after the social media company predicted revenue growth of 50% or more for several years, driven by more engaging advertising investments and innovations in augmented reality.
The company, which controls the Snapchat app, is “in a position to drive several years of 50% more revenue growth,” said Peter Sellis, senior product director, in a presentation on Tuesday on the first day of the Snap investor. . At the event, executives outlined a vision of how Snap, based in Santa Monica, California, will increase its audience while maintaining user privacy and trust.
The optimistic outlook may help to ease concerns that Snapchat, which allows people to post and share photos, videos and messages via smartphone, may be growing. The company still has room to expand after its growing popularity during the pandemic, when advertisers increasingly sought to use Snap’s augmented reality tools, which allow people to try products virtually.
“It is the augmented reality that is driving our future,” said CEO Evan Spiegel. “We are doubling this strategy in 2021.”
Marketers may also see Snapchat as an alternative means of advertising amid political turmoil and misinformation on other social media sites.
Snap’s shares rose to $ 71.50 at 3:37 pm in New York, pushing the company’s market value to more than $ 105 billion. The stock rose up to 15% after the comments, after falling more than 10% earlier in the day. The shares have risen more than 40% so far this year.
Analysts, on average, project sales will rise 48% to $ 3.72 billion this year, according to data compiled by Bloomberg. Snap’s growth is estimated at 37% for 2022 and 33% for 2023.
Snap’s chief financial officer, Derek Andersen, said the company expects operating expenses to increase from a growth rate of approximately 25% year on year in 2020 to a percentage rate in “the mid-30s in 2021”.
“Although our investment levels will be higher next year, we remain committed to the adjusted and sustained Ebitda profitability for the entire year and to continued financial progress over time,” said Andersen.
Andersen added that while the company has a strong user base among 19-24 year olds in established regions like North America, it expects to see even more growth in international markets. To drive these gains, the company added more local content, invested in regional marketing campaigns and offered more linguistic support for the products, he said.
“The region in the rest of the world comprises the majority of the global smartphone population and is the biggest driver of growth for our community,” he said.
(Updates with CEO comments in the fourth paragraph.)
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