Snapchat parent soars 25% after beating revenue, user growth estimates

Snap said its was improving faster than expected due to upgrades of its ad system and higher for features that help drive sales or website clicks.

Snap was set to add $4.7 billion to its market value, if gains hold. platform Pinterest climbed 4%.

"Revenue per user increased year over year for the first time since early 2022, reflecting the strength in the broader advertising market and Snap's efforts to revive growth," Morningstar analyst Michael Hodel said.

Daily active users of Snapchat increased to 422 million during the quarter, above estimates of 419.6 million. The company said first-quarter revenue grew 21% to $1.2 billion, above estimates of $1.12 billion.

While 18 Wall Street brokerages raised their price targets on Snap's shares following results, most analysts said they were looking for more consistent evidence that company's business has improved.

"Snap's results have historically been choppy and we are hesitant to extrapolate from one quarter of strong results," according to J.P.Morgan analysts.

Average rating of 41 brokerages covering the stock is "hold".

The stock has lost about a third of its value this year as the social media company struggled to compete for advertising dollars against heavyweights such as Meta Platforms.

"While operating margins continue to slowly improve, given better advertising revenue and cost controls, management is still several years from achieving operating profitability, something we think take until 2028 to achieve," Hodel said.