Snap Stock Plunges on Advertising Platform Concerns

Snapchat parent Snap Inc. now has more than 932 million monthly active users, and around 469 million daily active users, as the social platform continues to grow year over year.

In its second quarter earnings report, Snap posted revenue of $1.34 billion, up 9 percent from a year earlier, and a widened net loss of $263 million, compared to a year-earlier net loss of $249 million. The Q2 loss per-share was 16 cents, against a year-earlier per-share loss of 15 cents.

Snap narrowly beat a Wall Street analyst estimate for Q2 revenue of $1.34 billion, or a year-on-year increase of 8 percent.

But shares in Snap plunged after the market closed as investors looked beyond continued overall revenue growth to the prospects for specific ad platform growth. Stock in the parent company fell $1.35, or 14.4 percent, to $8.04 in after-hours trading.

Going into the second quarter results, Snap faced questions over whether the social media company can keep drawing and retaining advertising dollars in an increasingly competitive digital advertising business, especially against Meta.

Advertising revenue at Snap hit $1.17 billion in the second quarter, up 4 percent year-over-year, due mainly to growth from direct response advertising revenue, which rose 5 percent year-over-year. Brand marketing revenue was flat during the latest quarter.

But in its investment letter that accompanied its latest financial results, Snap pointed to a recent hitch in its advertising platform that caused some marketers to secure ads at lower prices: “Unfortunately, in our efforts to improve advertiser performance, we shipped a change that caused some campaigns to clear the auction at substantially reduced prices. We have since reverted this change and advertising revenue growth has improved as advertisers adjust their bid strategies to achieve their objectives.”

The latest advertising revenue growth is driven in part by a shift in the company’s approach to advertising, where it has been trying to shift the mix of brand advertising and direct response advertising. That’s after the social media company delayed offering formal guidance in April 2025 in response to economic headwinds.

During an after-market analyst call, Snap CEO Evan Spiegel in prepared remarks talked up AI-powered advertising budget and bidding options for marketers and sponsored Snaps, or inbox ads to extend a promotional campaign’s reach, to underline new initiatives to drive advertising revenue growth.

Spiegel left CFO Derek Andersen to explain what lay behind the choppy advertising revenue during the second quarter, which hit a trough in April, before recovering in May. He elaborated that growth was impacted by the botched adverting platform changes since dealt with, the “timing of Ramadan” and ending the de minimis exemption as part of U.S. President Donald Trump’s trade policies.

“The big focus at this point is building demand. We have seen, post-rollback of the ad change, as we move through June and into July, we’ve seen ad revenue specifically growing at a rate between three to four percent,” Andersen told analysts about pacing for ad revenue growth into the third quarter.

Other Q2 revenue, which is mainly Snapchat+ subscription revenue, rose 62 percent to $171 million.