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Snap Shares Plunge as Ad Glitch and Competition Stall Growth

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Snap’s (SNAP.N) shares fell nearly 21.5% in early trading on Wednesday following a weak quarterly performance and intensifying competition, highlighting its ongoing challenge to keep pace with AI-driven rivals.

The company’s slowest revenue growth in over a year was driven by advertisers cutting marketing budgets amid economic uncertainty and favoring larger platforms like TikTok and Meta’s Facebook and Instagram. A glitch in Snap’s ad-buying platform, which caused ads to be delivered at discounted rates, also contributed to the slowdown. Although Snap’s revenue met estimates, it was a significant drop from the double-digit growth seen over the past five quarters. Snap’s market value could fall by approximately $3.24 billion if losses persist.

Analysts at MoffettNathanson noted advertisers prefer platforms with direct access to purchase-ready users, diverse marketing tools, and clear ROI metrics — areas where Snap currently lags.

Snap’s performance contrasts with competitors Meta and Reddit, which reported strong second-quarter results, driving their shares up by 30.3% and 21.8% respectively this year, compared to Snap’s 12% decline. Following the results, at least 14 brokerages cut Snap’s price target, bringing the median to $9.

Snap is betting on its Sponsored Snaps video ad format, rolled out more broadly in June across the U.S. and other markets, which has driven increased user engagement and actions.

Morgan Stanley analysts said, “For Snap to capitalize on improvements in engagement, it must better demonstrate ad efficacy to advertisers and reduce barriers to adopting its products.”

Snap Reports Slowest Revenue Growth in Over a Year as Ad Platform Glitch and Competition Weigh

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Snap Inc. (SNAP.N), the parent company of Snapchat, reported on Tuesday its slowest quarterly revenue growth in more than a year, affected by a temporary glitch in its advertising platform and strong competition from larger rivals such as Meta and TikTok. The news sent Snap shares down over 16% in extended trading.

The company acknowledged and resolved an error that unintentionally allowed some ads to run at significantly lower prices, which negatively impacted revenue. Snap faces intense competition from Meta’s Facebook and Instagram, as well as TikTok, with advertisers favoring the bigger platforms amid tighter marketing budgets due to economic uncertainty. Meta and Reddit recently reported strong second-quarter results, highlighting Snap’s tougher market environment.

In addition, the timing of Ramadan influenced advertising spend patterns, and the expiration of a U.S. duty-free import exemption (“de minimis”) led some Chinese advertisers to reduce their budgets on the platform.

Snap’s second-quarter revenue was $1.34 billion, up 8.7% year-over-year, largely in line with expectations but slower than the double-digit growth seen in the previous five quarters. The company’s net loss widened to $263 million from $249 million a year earlier.

Small and medium-sized businesses were the primary drivers of ad revenue growth. Snap’s subscription service, Snapchat+, continues to diversify revenue, with subscriber numbers rising 42% to nearly 16 million during the quarter. Daily active users increased 9% to 469 million, slightly above estimates.

Snap projects third-quarter revenue between $1.48 billion and $1.51 billion, matching analyst expectations.