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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.

WPP Media Lowers 2025 Global Ad Revenue Growth Forecast to 6% Amid US Trade Uncertainty

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WPP Media on Monday revised down its forecast for global advertising revenue growth in 2025 to 6%, from an earlier estimate of 7.7%, citing increased uncertainty over U.S. trade policies. Advertisers appear to be delaying new marketing commitments amid shifting trade dynamics, the report by WPP’s media investment division revealed.

Digital advertising remains a key revenue driver for major tech firms including Google (Alphabet), Meta Platforms, Pinterest, Reddit, and Snap. The report highlighted how economic uncertainty is accelerating the adoption of AI tools for ad creation and targeting. Meta, for instance, plans to enable brands to fully create and target ads using AI tools by the end of 2026.

Research from Emarketer also suggests companies reliant on traditional keyword-based search ads may face revenue declines due to the rise of AI-driven search advertising.

WPP Media projects global advertising revenue will reach $1.08 trillion in 2025, with growth moderating to 6.1% in 2026. Digital advertising is expected to represent 73.2% of total ad revenue this year. Notably, user-generated content is forecasted to generate more ad revenue than professionally produced content in 2025.

The report anticipates print advertising revenue will decline by 3.1% to $45.5 billion in 2025, while search ad revenue is forecast to grow by 7.3%.

WPP Media also noted shifting brand strategies, including prioritizing flexible ad contracts, reallocating budgets toward direct-to-consumer media placements, and emphasizing secure data handling amidst economic uncertainty.

The U.S. remains the largest advertising market, with an expected growth of 5.6% to $404.7 billion, followed by China and the UK.