Shares of Snap are up more than 42% in premarket trading Friday after the company reported its first-ever quarterly net profit and showed it’s seeing quicker-than-expected progress on its transition with advertisers around Apple’s privacy changes on iOS.
It’s a big recovery from Thursday trading, when shares closed down 23.6%, Snap’s second-worst day ever, as investors appeared to flee social media stocks after Facebook’s poor showing on Wednesday evening.
Facebook owner Meta reported weak revenue guidance, which it blamed in part on the Apple changes impacting its ability to target and measure ads. Meta said the Apple changes would result in a $10 billion revenue hit to its business this year.
Meta shares saw their biggest-ever one-day drop on Thursday after the company provided weak guidance and stagnating user growth. Shares of Snap and Pinterest fell alongside it ahead of their own earnings reports, as they both seemed to be exposed to similar factors impacting advertising on Facebook: ad-targeting changes on iOS as well as inflation and supply disruptions impacting advertiser spend.
But both Snap and Pinterest reported strong earnings, sending their stocks soaring after hours. In premarket trading Friday, Pinterest shares were up more than 5%.
Snap still has a way to go to recover from the sell-off that has occurred over the last five months, however. At an implied opening of about $34.50, it’s still well below its $83.11 52-week high on Sep. 24.
Stifel analysts, which maintained a buy rating on Snap and raised its price target from $45 to $50, wrote in a note Thursday that the difference “between the strength and tone” of both the Snap and Pinterest calls versus Meta’s raises questions.
“At this point, we chalk it up to Facebook’s SMB-heavy platform vs. peers, though SNAP management seemed to suggest SMBs should be able to navigate these waters just as well,” they wrote, referring to a common acronym for small- and medium-sized businesses.
Wedbush Securities analysts, which downgraded Snap to neutral but raised their price target from $36 to $40, also pointed to Snap management’s comment that their ad-targeting products were built with privacy in mind to explain the difference between its results and Meta’s in response to the Apple changes.