Snap Inc. (NYSE:SNAP), the parent company of Snapchat, trended on Wednesday as social media stocks continued to trade actively amid strong digital advertising demand and expanding user bases.
Despite long-term growth potential, Snap has struggled to keep pace with rivals. Shares have plunged 33% year-to-date after the company missed earnings expectations in its last two quarters.
The stock's underperformance reflects intensifying competition from Meta Platforms' (NASDAQ:META) Facebook and Instagram, Alphabet's (NASDAQ:GOOGL) Google and YouTube, and ByteDance's TikTok, all vying for user engagement and advertising dollars.
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On August 6, Snap released second-quarter results that highlighted both progress and ongoing challenges. The company posted a net loss of 16 cents per share, matching Wall Street expectations, while revenue of $1.345 billion narrowly beat consensus estimates.
User growth remained solid, with daily active users rising 9% year-over-year to 469 million and monthly active users climbing 7% to 932 million.
Even with steady user gains, analysts remain cautious. UBS, Piper Sandler, and Guggenheim maintained Neutral ratings but lowered price forecasts following the earnings release. JMP Securities cut its rating from Market Outperform to Market Perform.
Concerns deepened this week after Guggenheim's Michael Morris reiterated a Neutral stance, citing signs of slowing user momentum in the third quarter.
The firm's Snap Ads Manager data indicated global audience growth of just 2.3%, down from 3.9% in the prior quarter.
North America showed particular weakness, with audience reach declining 1.5% year-over-year, worsening from a 1.1% decline in the second quarter.
Price Action: SNAP stock is trading lower by 1.37% to $7.23 at last check Wednesday.
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