Shares of the parent of Snapchat initially soared 11% in extended trading before slipping Tuesday after reporting fiscal second-quarter earnings that beat analyst estimates.
Snap narrowed adjusted losses to 14 cents per share on a 44% hike in revenue to $262.3 million.
Analysts, on average, had expected an adjusted a loss of 18 cents per share on revenue of $249.8 million.
The Los Angeles-based company's daily active users grew 8% year-over-year to 188 million, shy of the 193 million forecast by analysts. But the closely followed average revenue per user increased to $1.40 from $1.05 in the same quarter a year ago.
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"We are excited by the progress we have been making and are optimistic about the opportunities ahead as we continue to invest in innovation," Evan Spiegel, Snap's chief executive, said in a statement.
Snap (SNAP) has lagged behind its social media brethren this year while waiting for its retooled design to resonate with consumers. Its shares are down nearly 10% for the year, as of Tuesday morning, while Facebook (FB) stock is up 5% despite a quarterly bloodbath last month.
Skepticism heading into Snap's better-than-expected results was highlighted by Wall Street's reaction to Snap's five quarterly reports since its March 2017 initial public offering: Shares responded positively only once. On two occasions, they plunged more than 20% after results were announced.
"We believe the market has trained itself to approach each quarterly result with a heavy dose of caution as Snap remains a'show me' stock," Moness Crespi Hardt analyst Brian White wrote in a recent note.
Of 35 analysts following Snap, six have recommendations of Buy, 18 Hold, and 11 Sell. Their average price target is $12. Shares closed at $13.12, up 7 cents, for the regular session. They are now up 6.71% to $14.00 in late trading.
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