Snap had a good quarter, and the market treated it like a rescue. The shares jumped after hours, up as much as 13%, once the company beat estimates. The catch is where that rally begins: a stock near its all-time lows, down about 37% this year.
The headline numbers were genuinely good. Revenue rose 19% to $1.6bn, ahead of forecasts, helped by a wave of World Cup advertising. The net loss narrowed to $164m, free cash flow turned positive at $121m, and adjusted earnings beat estimates by a wide margin. Snap guided the current quarter above expectations too.
Look closer, though, and the growth is lopsided. Advertising, the business Snap is built on, grew just 9%, anaemic next to its bigger rivals. The eye-catching figure, an 85% jump in “other” revenue to $316m, came from subscriptions, storage and paid lenses. Snap is making more from its existing users, not from selling much more of its core product.
America is leaving Snap
The audience is the real problem, and the revenue split makes it plain. Daily users reached 493m, up 5%, but the growth is entirely offshore. North American daily users fell 7% to 92m, and Europe slipped 2%. Only the rest of the world grew. That matters because a North American user is worth about $10 a quarter. A rest-of-world user is worth $1.
