(Bloomberg)-Snap Inc.’s stock price jumped to a record high, reversing the previous decline. The social media company predicted that the company will spend many years due to investments in more attractive advertising and innovations in augmented reality technology. The coming revenue growth will reach 50% or more.
The company is the parent company of the Snapchat app and “can drive more than 50% of revenue growth over many years,” Senior Product Director Peter Sellis said in his first investor day speech at Snap on Tuesday. At the event, executives outlined a vision for how Snap, headquartered in Santa Monica, California, will increase its audience while maintaining user privacy and trust.
An optimistic outlook may help alleviate people’s concerns that Snapchat, which allows people to post and share photos, videos and messages via smartphones, may peak. During the pandemic, when advertisers increasingly seek to utilize Snap̵
“Augmented reality drives our future,” said CEO Evan Spiegel. “We will double this strategy in 2021.”
Under political turmoil and misleading information on other social media sites, marketers may also see Snapchat as an alternative place for advertising.
Snap’s stock price rose to $71.50 at 3:37 pm in New York, giving the company a market value of more than $105 billion. Affected by the above comments, the stock rose 15% at one time, and fell 10% earlier in the day. So far this year, the stock price has risen by more than 40%.
According to data compiled by Bloomberg, analysts, on average, project sales this year will increase by 48% to $3.72 billion. Snap’s growth is expected to reach 37% in 2022 and 33% in 2023.
Derek Andersen, Snap’s chief financial officer, said the company expects operating expenses to grow from a year-on-year growth rate of approximately 25% in 2020 to a “mid-1930s” percentage in 2021.
“Although the investment level in the coming year will increase, we are still committed to maintaining the adjusted profitability of Ebitda throughout the year and continuing to make financial progress over time,” Andersen said.
Andersen added that although the company has a strong user base among 19 to 24 year olds in mature regions such as North America, it hopes to see more growth in the international market. In order to increase these benefits, the company added more local content, invested in regional marketing activities, and provided more language support for the product.
He said: “The rest of the world accounts for the majority of the global smartphone population and is the biggest driving force for the development of our community.”
(Updated based on the CEO’s comment in the fourth paragraph.)
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