Snapchat’s Parent Company Crashes 20% After Ad Platform Meltdown Torches Earnings

Another 'growth story' stumbles over its own tech.

Snap Inc.'s stock just got snapped in half—figuratively speaking—after its advertising platform glitches triggered a revenue hemorrhage. The social media darling's Q2 earnings report reads like a cautionary tale for overleveraged tech plays.

Ad dollars vanish into the void

When your core product depends on algorithmically served ads, even minor targeting errors snowball into nine-figure losses. Snap's engineers are now scrambling to plug the leaks in what analysts are calling 'a preventable infrastructure failure.'

Wall Street's patience wears thin

Investors who bought the 'metaverse pivot' narrative are discovering that augmented reality lenses don't pay the bills. The stock's 65% year-to-date plunge makes crypto's volatility look tame by comparison—and that's saying something.

One thing's certain: when your ad platform becomes the story, you're not selling enough ads.

Key Takeaways

• Snap reported a wider loss and missed adjusted earnings estimates as it deal with an ad platform glitch.
• The operator of the Snapchat social media site said the ad problem led to some sales clearing its auction at substantially reduced prices.
• Snap's revenue was also limited by the timing of Ramadan and tax changes for sales of lower-priced imports.

Snap (SNAP) shares snapped 20% lower Wednesday, a day after the operator of the Snapchat social media site posted a higher net loss and adjusted earnings missed forecasts as it dealt with an ad platform glitch.

The company reported a net loss of $262.6 million, 6% more than a year ago, and GAAP loss per share of $0.16 was also more than anticipated by analysts surveyed by Visible Alpha. Adjusted EBITDA slumped 25% to $41.3 million, well below the Visible Alpha estimates, while revenue of $1.34 billion was basically in line with expectations.

Daily active users increased 9% to 469 million. However, average revenue per user of $2.87 was just $0.01 higher than in 2024, and was down $0.09 from the first quarter. Total costs and expenses jumped nearly 8% year-over-year to $1.60 billion.

In a letter to shareholders, CEO Evan Spiegel wrote that revenue growth was "impacted by a number of factors in Q2, including an issue related to our ad platform," which he explained happened because "in our efforts to improve advertiser performance, we shipped a change that caused some campaigns to clear the auction at substantially reduced prices."

Spiegel added that revenue was also hurt by the timing of the Muslim holy month of Ramadan, along with the TRUMP administration’s changes to tax rules for purchases of lower-priced imported products.

Shares of Snap have lost about a third of their value this year.

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