Snap shares fell nearly 17% in premarket trading due to weak quarterly performance and competition from AI-driven companies. Advertiser budgets are being cut amid economic uncertainty, favoring larger platforms such as TikTok and Meta's Facebook and Instagram. Revenue growth is now at 8.7%, slowing from previous double-digit increases. Analysts note Snap lags in critical areas, stating it remains in 'monetization purgatory'. Rival platforms reported better results, raising concerns for Snap's future, despite new advertising formats aiming to improve engagement with users.
"Snap still lags on all three fronts: sitting closer to users inclined to buy their product, offering varied marketing strategies, and demonstrating a clear return on ad spend."
"Snap is now in a tough spot, trailing rivals Meta and Reddit, which are benefiting from AI-driven business strategies, with Snap's shares down around 12% this year."
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