Snap CEO Evan Spiegel Rallies Staff to Revive Fortunes

Snap Inc. CEO Evan Spiegel is urging employees to stay focused as the company’s stock has dropped 48% this year, despite being on track for record annual revenue. In an internal letter, Spiegel acknowledged that Snap’s advertising business is growing slower than its competitors, leading to the lag in share price.

Snap, known for its Snapchat app, competes with giants like Meta’s Instagram and ByteDance’s TikTok, both of which have larger and faster-growing advertising platforms. Meta’s shares have risen 45% this year, highlighting the challenge Snap faces in keeping pace.

To address these challenges, Snap has shifted its ad strategy, placing more emphasis on direct response ads that encourage specific user actions, such as app downloads or product purchases. While this transition led to several quarters of declining sales in 2023, Snap saw a 16% increase in direct response revenue in the second quarter.

Spiegel revealed that Snap is testing new ad formats, including placing ads in the chat inbox and on its map feature, marking the first time the company is monetising its popular maps function.

Snap is expected to generate $5.35 billion in revenue this year, a 16% increase from last year, according to Bloomberg data. The company is also investing heavily in augmented reality (AR) technologies and smart glasses, positioning itself as a leader in these emerging markets.

Snap first introduced smart glasses, called Spectacles, in 2016. While initial sales were modest, the company is expected to release a new pair of AR smart glasses at its annual partner summit, as it continues to compete with rivals like Meta in the AR space.