Snap Stock Is Attracting Buyers Wednesday: What's Going On?

Snap Inc SNAP shares are trading higher Wednesday after the company reported better-than-expected financial results and announced a $500 million buyback. 

What Happened: Snap said third-quarter revenue increased 5% year-over-year to $1.19 billion, which beat the consensus estimate of $1.11 billion, according to Benzinga Pro. The company reported quarterly earnings of 2 cents per share, which beat analyst estimates for a loss of 4 cents per share.

Daily active users grew 12% year-over-year to 406 million. Total time spent watching Spotlight increased more than 200% on a year-over-year basis. Snap noted that more than 200 million people have sent messages using its AI-powered chatbot since launch. 

Operating cash flow came in at $13 million while free cash flow was negative $61 million, down from $18 million in the prior year. 

"We are focused on improving our advertising platform to drive higher return on investment for our advertising partners, and we have evolved our go-to-market efforts to better serve our partners and drive customer success," said Evan Spiegel, CEO of Snap.

The company noted that it has "observed pauses in spending from a large number of primarily brand-oriented advertising campaigns immediately following the onset of the war in the Middle East."

Given the headwinds related to the war, Snap said it was refraining from providing formal guidance, but its internal forecast assumes fourth-quarter revenue of $1.32 billion to $1.375 billion. The company also expects daily active users to reach 410 million to 412 million in the coming quarter.

Snap also announced that its COO Jerry Hunter will retire and that its board authorized a share repurchase program of up to $500 million.

Following the company's quarterly results, Rosenblatt analyst Barton Crockett maintained Snap with a Neutral rating and raised the price target from $9 to $11. Morgan Stanley analyst Brian Nowak maintained an Underweight rating and raised the price target from $6.50 to $7.

See Also: Alphabet Stock Is Sliding: What's Going On?

SNAP Price Action: Snap shares were up 4.74% at $10.18 at the time of publication, according to Benzinga Pro.

Photo: Souvik Banerjee from Pixabay.