Wednesday 22 April 2020 10:17 am

Snapchat shares jump as coronavirus lockdown boosts user numbers

Snapchat has reported a sharp spike in user numbers during the first quarter as millions of people turned to the social media app during the coronavirus lockdown.

Parent company Snap said daily active users rose 20 per cent year on year to 229m in the first three months of 2020.

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Revenue also grew 44 per cent over the period to $462.5m (£375m), while net loss narrowed by $4m to $306m.

Shares in Snap rose as much as 24 per cent in after-hours trading in New York.

It came as millions logged on to the photo sharing platform to stay in touch with friends during the pandemic. The firm said messaging increased more than 30 per cent in the last week of March compared to the last week of January.

Chief executive Evan Spiegel said: “Snapchat is helping people stay close to their friends and family while they are separated physically, and I am proud of our team for overcoming the many challenges of working from home during this time while we continue to grow our business and support those who are impacted by Covid-19.”

However, Snap will not be immune to a squeeze on advertising revenue as brands pull spend as a result of the coronavirus downturn.

The company said revenue growth had slowed in March as advertisers began to tighten budgets and said it would not provide forecasts for the second quarter due to uncertainty related to Covid-19.

As a result, Snapchat plans to shift its focus to selling ads for industries such as gaming, home entertainment and packaged goods that have experienced increased demand from people stuck at home.

“The fact that Snap was able to grow revenue by 44 per cent against the backdrop of Covid-19 is a testament to how the platform has firmed up its place in the marketing mix,” said Aaron Goldman, chief marketing officer at 4C Insights.

“Brands are using Snap to reach passionate audiences that are hard to reach on other media platforms. We’ve also seen many traditional television advertisers turn to Snap to extend their campaigns and drive engagement.”

The app, which is best known for its disappearing messages, said it was continuing to invest in its Discover platform, which provides branded content from publishing partners.

The firm said total daily time spent watching Discover content increased 35 per cent, while time watching shows more than doubled.

Read more: Snap stumbles after missing revenue expectations

Jim Cridlin, global head of of innovation and partnerships at WPP agency Mindshare, said: “Because Snap has focused on the things advertisers care about: premium content, brand safety controls, and innovative ad products; advertisers seem to finally be taking them seriously.

“Although consumers may see TikTok as a rival to Snapchat, Snap’s focus on bettering brand safety has kept advertisers from leaving for its rival — for now.”