The camera app company Snap Inc. (NYSE: SNAP) has aggressively been pursuing growth opportunities to expand its user base by integrating new features. With the launch of the much-waited ‘Spotlight’ video feature, Snap appears in a position to generate more ad revenue in the days ahead, according to analysts.
“The Spotlight feature will re-energize public content creation on Snapchat, and create valuable incremental ad opportunities,” said Stifel Nicolaus analyst John Egbert.
The new video entertainment feature will provide an opportunity for surfacing the most entertaining Snaps from the community.
Like a small video clip app TikTok, Snap plans to offer money to users who submit video clips, with expectations that payouts would reach $1 million every day.
The shares of camera app company soared close to 170% since the beginning of this year as pandemic related social distancing policies are helping in boosting the user base and revenue growth. Jeffries says Snap is likely to benefit from increasing digital advertising.
Spotlight feature will fuel ad revenue growth
The company expects that the latest spotlight feature will improve its user’s engagement, which helps it in selling high-value ads like its six-second commercials that it run in Discovery shows. The management saw a 20% year over year increase in ad pricing during the September quarter
The social media app has generated 52% year-over-year growth in ad revenues in the latest quarter while the user base grew 18% from the past year period. Its adjusted EBITDA came in at positive $56 million compared to a loss of $42 million in the year-ago period.
Besides the spotlight feature, the company says it is investing heavily in the discover platform, camera, and augmented reality to enhance user engagement.
“The adoption of augmented reality is happening faster than we had previously anticipated, and we are working together as a team to execute on the many opportunities in front of us,” said Evan Spiegel, CEO