Snap (SNAP) stock sank more than 18% Wednesday after the Snapchat parent company reported second quarter earnings and revenue the prior afternoon that missed Wall Street’s estimates amid a problem with its ad platform.
Snap’s second quarter advertising revenue grew at its slowest pace in more than a year, rising roughly 4% to $1.17 billion in the second quarter, less than the $1.22 billion expected by Wall Street analysts tracked by Bloomberg.
The company said in a call with analysts that an issue with its auction system — which is used to price advertising campaigns for marketers on its platform — caused campaigns to sell for “substantially reduced prices.”
Snap’s adjusted earnings per share of $0 were below the $0.02 expected, while the social media platform’s quarterly revenue of $1.34 billion was less than the $1.35 billion expected by Wall Street analysts, according to Bloomberg data.
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Though its 469 million global daily active users were ahead of the 468 million expected, its 98 million users in North America fell slightly short of the 99 million estimated by analysts.
The social media platform faced heightened expectations from Wall Street going into its report after a string of corporate earnings from tech firms such as Meta (META), Reddit (RDDT), Alphabet (GOOGL, GOOG), and Amazon (AMZN) highlighted strength in their advertising businesses. Under CEO Evan Spiegel, Snap has been fighting to regain traction in its ad business.
“SNAP had a tough Q2,” wrote RBC Capital Markets analyst Brad Erickson in a note to clients early Wednesday. “Most importantly, Q2’s execution on ad platform development & surface expansion efforts did not go according to plan, which will continue to reinforce the bear case that SNAP cannot break out of being a smaller ad platform lacking the ability to durably grow its direct response business in-line with the market.”
Snap stock is down nearly 29% in 2025, underperforming its peers. Meta and Reddit, for example, are up 31% and 26% for the year, respectively.
Still, Snap’s outlook for the current quarter topped analysts’ expectations. The company expects third quarter revenue to fall between $1.48 billion and $1.51 billion, while analysts had estimated a midpoint of $1.48 billion. Snap projects third quarter adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $117.5 million at the midpoint, more than the $116.1 million expected.
Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.
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Correction: A previous version of this article misspelled Evan Spiegel’s name. We regret the error.
