Snap Stock Crashes: Here’s Why Investors Are Panicking Today

Snap Inc.'s stock just took a nosedive—and Wall Street's 'geniuses' are scrambling for excuses. Here's the brutal breakdown.

The Bleeding Numbers

No sugarcoating it: Snap shares got slaughtered in early trading. The usual suspects—weak ad revenue, TikTok eating its lunch—are back with a vengeance.

Reality Check

Another 'growth story' hitting the wall? Shocking. Meanwhile, crypto markets keep printing gains while legacy tech plays musical chairs. Funny how that works.

Bottom line: When your 'disruptive' platform gets disrupted, maybe it wasn't that disruptive after all.

Image source: Getty Images.

Snap stock sinks in concerning engagement trends

Snap recorded a loss of $0.16 per share on sales of $1.35 billion in the second quarter. Sales for the period matched the average analyst estimate, but earnings per share came in $0.01 lower than Wall Street's target. While sales were up 8.9% year over year, user engagement and revenue composition trends point to problems for the business.

Snap's total daily active users (DAUs) ROSE 8.6% year over year to reach 469 million, but average revenue per user came in at $2.87 and missed Wall Street's target for revenue per user of $2.89. While overall DAUs were up significantly in the quarter, the business saw another dropoff in the crucial North American market. North American DAUs came in at 98 million in Q2, down from 99 million in this year's first quarter and 100 million in last year's second quarter.

What's next for Snap?

Snap is targeting revenue between $1.475 billion and $1.505 billion for the current quarter. Meanwhile, management anticipates ending the period with approximately 476 million DAUs. Even though the company's overall DAU count looks poised to continue rising in the NEAR term, it's seeing engagement declines in the North American market that monetizes at much higher levels compared to other territories -- and its position in artificial intelligence (AI) isn't as strong as other leading social media players.

While the company's augmented reality glasses could prove to be a meaningful catalyst, the Core growth engine is facing some challenges right now.