Snap continues to struggle as growth slows

Last week, Snap CEO Evan Spiegel marked the company’s 13th anniversary with a letter to employees that did not strike a celebratory tone. Instead, the Snapchat founder said the company is struggling, with its share price down 45% this year. According to an analysis at Sherwood news, “Snap, like Meta, relies on advertising for the overwhelming majority of its business, some 96% of its $4.6 billion in revenue was from ads last year, a figure that barely grew relative to 2022 — not ideal for a company that is still running at a heavy loss.”

To help right the ship, Spiegel specified two new experiments to get more ads in more places across the app. One change is the introduction of “Sponsored Snaps”, which will now appear in the previously ad-free chat inbox. While opening these sponsored messages is optional, the move signals that no part of the Snapchat experience is off-limits when it comes to monetization. Additionally, Snap is rolling out “Promoted Places”, allowing businesses to pay for greater prominence on the Snap Map

When those ad dollars do roll in, they quickly get spent, as Snap continues to invest heavily in other projects such as the company’s mini camera drones, Pixy, and AR glasses called Spectacles — a product the company has been developing for roughly a decade.

The good news for Snap is that its user numbers have continued to grow, mostly outside of North America recently. The app now boasts 432 million daily active users — more than double what it was five years ago, according to Sherwood.news.