that revenue declined in the second quarter, wiping almost a fifth off its market capitalization. Since its initial public offering in 2017, shares have declined 13% on average, annually. It might be time to rethink Snap’s future. Too bad for shareholders, boss Evan Spiegel has almost complete control.
Snap is still struggling to pry money from advertisers, a worrisome trend for a relatively young company. Revenue for the second quarter fell 4% year-over-year to $1 billion and the outlook for third quarter is not much of an improvement. The top line is expected to be flat at best and decline 5% at worst, the company said.
It wasn’t always this way – and it doesn’t have to continue. Snap had for a while managed to far outpace Meta Platforms’ revenue growth, having quadrupled its top line since the end of 2018 through 2022, while sales at Mark Zuckerberg’s $755 billion giant, which reports earnings Wednesday night, have about doubled. The problem is that Spiegel hasn’t yet figured out a viable business model, and that’s become a much bigger problem in a more competitive advertising market. For example, daily active users jumped 14% this quarter to 397 million, notching 18 consecutive quarters of growth.
Spiegel might chalk the company’s valuation degradation up to a more measured stock market, and there’s something to that. When the then
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