The company does not provide detailed financial guidance.
However, several Wall Street analysts remained unconvinced that Snap can sustain its new-found momentum. This pushed the stocks past the $17 per share that the company had during its IPO and now, several Wall Street analysts are already raising their predictions of the company's prospects.
It is hoped that the redesign, which is still in the process of rolling out, will help the company scrape back some of the early-stage popularity that was knocked by Instagram Stories.
Snap is still struggling massively to bring its revenue up to par with expenses. Snap had a negative net margin of 463.16% and a negative return on equity of 107.36%. Their quarterly revenue rose by 46%, to $285.6 million (which exceeds expectations by upwards of $32 million).
Some of Snapchat's advertising revenue comes from ads that it shows alongside videos and stories created by its publishing partners - media companies like ESPN, Bleacher Report and People magazine.
Analysts are waiting to see whether the positive steps are, in fact, trends. A drop in quality takes users' attention elsewhere and Snapchat is now facing that challenge. Not only that, the more competition for Snapchat's inventory, the more bigger brands may need to spend to reach a wide swath of people, since smaller brands are typically willing to pay more per ad to reach a smaller but more specific audience (provided Snapchat continues to prove it has enough users and ad-targeting chops for brands to reach those small, specific audience segments).
The main reason given by the company for the stellar revenue numbers was the fact that daily active users have risen dramatically since the previous quarter. Annual ad revenue climbed 74% year-over-year, said Imran Khan, Snap's chief strategy officer. Snap will also need to retain its younger core user base, some of which responded with hostility to the new changes.
This quarter was certainly a turnaround for Snap and, while it is now operating at a loss, there is much evidence to prove that its business strategy is paying off. Will it still be able to continue to attract new advertisers, and new users, when 2 billion people use Facebook each month, and almost double the number of Snapchat's users use Instagram's knock-off Stories feature?
Facebook Messenger and iMessage offer similar tools, inspired by those overly communicative friends who make you regret agreeing to push notifications.