Diamonds and Dogs

2/7/18

Investors snapping up SNAP (SNAP). The camera social network company is up 38% following better than expected earnings. Snap reported better than expected earnings as revenue rose 72% to $285 million above estimates. Daily active users (DAU) increased 8.9 million or 5% sequentially to 187 million ahead of estimates, the highest net adds since 2016. Average revenue per user (ARPU) was $1.53, up 46% year-over-year and up 31% sequentially. Good news for SNAP and good news for advertising going forward.

Chipotle Mexican Grill (CMG) taking a hit again. The company reported better than expected earnings, but the stock is down 11% not far from a 52 week low. The earnings beat was due in part to a big tax-cut benefit. Investors seem to be focused on the meager same store sales growth for 2018, coupled with fears of a heaping side of cost inflation. Food costs are down, but still count for 34.2% of revenue. A relief in avocado prices during the fourth quarter of 2017 helped earnings. They still make great food.