What would you call Gen-Z phone users in the Western world? Snapchat senders, obviously.
They don’t seem to be alone. On Tuesday, Snapchat parent Snapchat Inc.
SNAP 11.10%
they held their first ever investment day, which was a success. Shares of the day opened down more than 20% amid widespread technical sales but later rallied to finish more than 11%.
While investors expected Snap to detail its monetization efforts around key innovations such as augmented reality and its Snap Map, the company surprised Wall Street with one compelling detail: shares began flying after Snap product director Peter Sellis stressed that, thanks to the company ‘s self – service advertising platform company, it is capable of many years of 50% revenue growth. give. That’s significantly higher than the average 35.5% growth analysts expect Snap to deliver over the next five years, according to FactSet. It may be just enough to push Snap stock consistently higher, even after its shares have more than quadrupled over the past year.
Advertisers, of course, want to be where money is today. Snap said Tuesday that the “Snapchat generation” makes up 40% of global users, noting that 80% of its reach is over 18 years old. Snapchat says it now reaches more than 70% of 13- to 24-year-olds in countries that generate more than half of the world’s digital advertising costs.
Snapchat’s overall user base is still stagnant compared to Facebook or Instagram, but the good news for advertisers is that those who use the app do so often. Snap has said that users open its app an average of 30 times a day. Further, early data shows that Snapchat’s new technology significantly increases an advertiser’s chances of conversion. The company said Tuesday that those who used their enhanced beta-test reality technology to test results have been 2.4 times more likely to click through to buy than average. Confirming analysts’ bullish estimates, Snap said it believes its map and camera both represent multi-million-dollar opportunities for the company in the long run.
Snap’s camera is definitely a big difference right now from its competitors. While other social media apps like Facebook open up to news, Snap is opening up to its camera, which it believes features more of an environment that feels good for its users. That seems to have played a part in Snap’s annual revenue growth of 46% last year amid a tough economic environment that was fraught with news controversy.
At the same time, Snap says the current rise in usage on its platform – even though it’s temporary – can still help improve its technology meaningfully. The company made a point about noting that lenses that may resemble a juvenile – like a rainbow or a hot dog dancing – have a hidden value as each use adds data. to strengthen their AR algorithms.
While Facebook has shown that it pays to be big, Snap is working to prove that it pays to be young.
Write to Laura Forman at [email protected]
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