Snap shares soar as Android app shows promise

(AFP pic)

LOS ANGELES: Shares of Snap Inc rose 26% on Wednesday after the maker of Snapchat messaging app arrested a fall in users on Apple devices and drew a series of favourable reviews from analysts for its progress with a new Android app.

Snap faced criticism last year for a botched-up redesign of its messaging app and millions of users left the platform. Users peaked at 191 million in the first quarter of last year.

The company reported 186 million daily active users at the end of December, steady compared to three months earlier and beating Wall Street expectations of US$184.91 million. It said it expects no decline in users in the first quarter of this year.

“We are taking comfort in the iOS user stabilisation, (but) the more important product development for us will be the release of the Android app to help reignite user growth,” Credit Suisse analysts wrote in a note.

At least 11 brokerages raised their price targets on the stock.

The targeting of Android users is a change of tune for CEO Evan Spiegel, who prioritised development on the Apple ecosystem through its stock market launch in 2017.

Analysts said that if Snap can repair the reputation of the Android app on what is now the world’s main mobile operating platform, its user growth may return.

Jefferies analysts said, “2018 was the year of exodus from both employees and users on the platform, but we believe that Snap is turning the corner in ’19 and that will help investor sentiment improve throughout the year.”

However, several analysts said they would wait for further signs of improvement in Snap’s business before calling it a turnaround story.

Out of 37 who cover the stock, still, only three have “buy” or higher ratings on the stock, 24 are on “hold” and 10 have a “sell” rating.

Shares of Snap were up US$1.84 at US$8.88 on the New York Stock Exchange.