Shares of Snapchat owner Snap surged 35% last night after the company reported its first user growth since going public in 2017.

The gains - the company's biggest one-day gain since its debut - are a sign that a redesign of Snapchat's messaging app is taking hold in its battle with Facebook's Instagram.

The stock pushed past its IPO price of $17 for the first time since July last year and as many as 10 Wall Street analysts raised their price targets on the stock. 

Snapchat had earlier worked better on Apple phones but the Android version had issues. 

The company said that after fixing those software bugs, customers were now staying longer on the Android version of its app. 

CEO Evan Spiegel said the redesigned app will fully roll out in the current quarter. 

Advertisers are also taking to an auction-based advertising system that made it cheaper and easier to buy ads on Snapchat. 

Analysts, however, warned that the company still has significant challenges ahead.

They said that a good quarter does not change their fundamental view that Snap has its work cut out to continue to deserve a premium multiple. 

Snapchat faces stiff competition from Instagram, which has more than twice the daily users of Snapchat and threatened to stamp out Snapchat by copying features such as photo filters and disappearing slide shows.

Most analysts still view Facebook as better positioned to corner a bigger share of advertisers than Snapchat.