$SNAP - The SnapBack

Snapchat owner Snap Inc. (+10.45% after hours) reported its strongest three months as a public company yesterday, with its daily user base growing 7%from the previous quarter to 203 million. Q2 revenue also increased 48% annually, beating expectations. 

Zoom out: Snap’s 2017 and 2018 were about as bad as it gets for a disappearing photo sharing platform. The company suffered from shrinking downloads, a botched redesign, and competition from Facebook’s three-headed monster—Instagram Stories, Facebook Stories, and WhatsApp Status. 

But it looks like Snap’s beating that monster back. Its weapon? Teens.

How Snap learned to stop worrying and love Gen Z 

For a brief moment in 2017, CEO Evan Spiegel said the company wasn’t doing enough to get moms and dads snapping. But now, attracting Gen Z has come back into focus:

• Snap said earlier this month that it reaches 90% of 13-to 24-year-olds in the U.S.

Speaking of ads, Snap also improved its ad tech with features enabling partners to better track their campaigns.

• SimilarWeb, an analytics firm, said global visits to Snap’s advertising platform increased by 23.9% over the last year.

Finally...have you seen those filters? 

Snapchat’s rolled out a whole bunch of new features over the past few months:

• It’s augmented its augmented reality capabilities with a hugely popular gender face swap function, a baby face filter, and a GoTdragon on NYC’s Flatiron building. 
• It launched Snap Games, an in-app social gaming platform, in April. 

But it hasn’t completely recovered

Though Snap’s stock is up more than 180% since its December 2018 low, it still hasn’t reached its $17 IPO price from March 2017. And Snap keeps losing money ($255 million last quarter) as it spends on R&D for those whizbang AR features. 

Bottom line: Snap can’t touch Facebook’s world-dominating scale, but its advanced tech and grip on the teen market could give it an edge.