Instant stock surges after earnings. It’s a good sign for social media stocks.

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Snap stock jumped after the company reported earnings.

The time of dreams

Increase in advertising revenue reported by social media platforms Snap and

Twitter

were enough to send a positive signal to the big tech companies Alphabet and

Facebook

to intraday records in Friday trading.

Break

(ticker: SNAP) the stock soared on Friday, rising 25% to $ 28.72 in the afternoon, as

Alphabet

(GOOGL) stock jumped 2.9% to $ 2,643.66, and Facebook (FB) stock jumped 6% to $ 372.99. If Alphabet shares close above $ 2,568.43 and Facebook ends before $ 355.64, that will mark a record high. Twitter (TWTR) stock rose 3.8% to $ 72.19. All four stocks had Friday trading volumes well above their 60-day averages.

The strong revenue growth of Twitter and Snap seems to be a positive signal for other internet platforms that depend on digital ad revenue, such as Facebook and Alphabet, but it has also supported niche advertising companies such as

Pinterest

(PINS), digital advertising technology company

Trade office

(TTD) and video streaming platform

Roku (ROKU).

All three stocks are soaring in trading on Friday.

Last year, Snap’s powerful third quarter results were a harbinger of a significant rebound in the digital advertising industry, after it was damaged at the start of the then Covid-19 pandemic. that advertisers have cut spending for fear of an economic downturn. One of the reasons for the strong rebound shown by Snap and Twitter last year is that big brands have returned to the same level of ad spend as they were two years ago, said Brian Wieser, global chairman of GroupM Business Intelligence.

“They’re mostly bouncing from last year’s lows – they’re coming back to 2019 levels,” Wieser said.

Evercore ISI analyst Mark Mahaney wrote in a note that the growth of internet advertising is on the rise, based on the results of Snap and Twitter. But because the second quarter of 2020 was a tough one for online ads, Snap had a low bar to beat this year and robust growth was expected. The question now, according to Mahaney, is which companies can support growth until the second half of 2021.

Snap said non-GAAP earnings of 10 cents per share, adjusted for stock compensation, among other items. Revenue rose 116% to $ 982 million, crushing Wall Street expectations of more than $ 100 million. Snap also forecast that it will make more than $ 1 billion in revenue for the first time in the third quarter.

Snap is in good shape for the second half of the year due to strong user growth, interest in improving its advertising products, and large investments in the sales teams responsible for it. North America, said Mahaney.

For its part, Twitter reported a net profit of $ 65.7 million on sales of $ 1.2 billion, greatly exceeding estimates. But, the number of monetizable and lucrative daily active users of Twitter in the United States sequentially declined by one million to 37 million in the second quarter, well below consensus estimates of 38.7 million. Raymond James analyst Aaron Kessler called the user number “soft.” Investors should closely monitor the effects of reopenings following lockdown orders triggered by the Covid-19 pandemic.

As the second quarter approached, investors and advertisers were concerned about recent changes to the way technology tracking in

Apple

‘s (AAPL) that powers iPhones and iPads, which could potentially hurt revenue. But, Snap and Twitter said it had a limited effect in the second quarter, although the impact going forward is uncertain.

Barron wrote positively about Facebook in the April 5 cover issue, saying the stock was underrated by investors with a 20% rise from its price of $ 299 at the time.

Write to Max A. Cherney at [email protected]

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