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Oct 21, 2020

Snapchat co-founders share US$2.7B windfall

NEW YORK, NY - MARCH

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Snap Inc.’s co-founders got richer by billions of dollars in just a few hours, after the company reported better-than-expected results as the coronavirus pandemic boosted usage of its app.

Shares soared as much as 25 per cent to US$35.57 in late New York trading Tuesday after the owner of the popular Snapchat mobile app said sales jumped 52 per cent to US$678.7 million in the third quarter, with 249 million daily active users. The gains lifted the fortunes of Snap’s co-founders, Evan Spiegel and Bobby Murphy, by US$1.3 billion and US$1.4 billion, respectively, taking them to US$6.9 billion and US$7.2 billion, according to the Bloomberg Billionaires Index.

Spiegel has pocketed over US$200 million from Snap stock sales during 2020, benefiting from the record prices. The sales were made between January and September as part of a trading plan adopted by Spiegel, according to SEC filings. Snap shares have climbed 74 per cent this year.

Wealth accumulation in the tech world has been eye-popping during the pandemic as the shift of everything from work, shopping, schooling and entertainment online has boosted demand for digital services. Zoom Video Communication Inc.’s Eric Yuan added US$6.6 billion to his net worth in just one day last month, and Amazon.com Inc.’s Jeff Bezos, the world’s richest person, saw his fortune swell by US$75 billion in 2020 to US$190 billion.

Snap, whose Snapchat is used to send photos and videos that disappear within seconds, said its net loss narrowed to US$200 million, or 14 cents a share. The company posted profit of 1 cent a share excluding some costs, beating the 5 cent loss that analysts predicted. If the positive advertising trends continue, fourth-quarter revenue may jump 47 per cent to 50 per cent from the same period last year, Snap added.