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Key Stats for SNAP Stock
- Price Change for Snap stock: -16%
- Current Share Price: $7.87
- 52-Week High: $13.28
- SNAP Stock Price Target: $9.88
What Happened?
Snap (SNAP) stock crashed more than 16% after the social media company reported second-quarter earnings that disappointed investors despite meeting revenue expectations.
While Snap posted revenue of $1.34 billion versus the $1.35 billion consensus estimate, the company’s global average revenue per user (ARPU) of $2.87 fell short of the $2.90 analyst expectation, signaling continued monetization challenges.
Snap’s advertising revenue grew just 4% year-over-year to $1.174 billion, lagging peer performance as companies like Reddit reported ad revenue growth of 78% and Amazon’s online ad sales surged 23% in the June quarter.
Snap’s struggles were compounded by a self-inflicted wound when management revealed they had mistakenly deployed an ad platform change that caused campaigns to clear auctions at “substantially reduced prices,” though this issue has since been resolved.
Adjusted EBITDA of $41 million also missed analyst expectations of $53 million, while the company reported a net loss of $262.6 million compared to $248.6 million in the prior year period.
Despite user growth continuing with daily active users reaching 469 million (up 9% year-over-year), the platform’s inability to effectively monetize its audience remains a persistent concern.
See analysts’ growth forecasts and price targets for SNAP (It’s free!) >>>
What the Market Is Telling Us About SNAP Stock
The brutal selloff in SNAP stock reflects deep skepticism about Snap’s competitive positioning in an increasingly challenging digital advertising landscape.
While the social platform continues to grow its user base globally, the flat ARPU performance signals that Snap is struggling to capture advertiser dollars that are flowing to competitors with more sophisticated targeting and measurement capabilities.
Most concerning for investors is SNAP’s performance in North America, where daily active users declined 2% year-over-year to 98 million.
This mature market typically generates Snap’s highest advertising rates, and the user decline suggests the platform may be losing relevance among its core demographic despite investments in AR features and content discovery.
CEO Evan Spiegel’s acknowledgment that SNAP was impacted by “the timing of Ramadan” and “effects of de minimis changes” related to trade policies suggests the stock remains vulnerable to external factors that peers like Meta and Google appear to navigate more successfully.
The operational misstep with the ad platform change also raises questions about execution quality during a critical growth period.
However, there were some bright spots that the market may be overlooking. Snapchat+ subscriptions approached 16 million users, representing 42% year-over-year growth and driving the “other revenue” category to a $700 million annualized run rate.
Additionally, the rollout of Sponsored Snaps is showing early promise, with users exhibiting 2x higher engagement and conversion rates compared to other ad inventory.
Snap’s ambitious AR glasses launch planned for 2026 represents a key opportunity to differentiate from competitors.
Still, investors appear focused on Snap’s near-term monetization struggles rather than its long-term innovation potential.
Snap’s Q3 guidance of $1.475-1.505 billion in revenue slightly exceeded expectations, but may not be enough to restore confidence given the competitive headwinds.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
