Snap’s Earnings Show a Stalled Business

Last Friday, the day after Figma went public with a 250% pop, former Federal Trade Commission Chair Lina Khan tweeted that Figma’s success was “a great reminder that letting startups grow into independently successful businesses, rather than be bought by existing giants, can generate enormous value.” Good point. But for every Figma, there’s a Snap, whose CEO Evan Spiegel famously turned down a $6 billion buyout offer from Facebook, the predecessor to Meta Platforms, in 2013. No one would say Snap has created “enormous value” for anyone other than Spiegel. For much of this year, Snap stock has traded about 45% below its 2017 IPO price.

As demonstrated by Snap’s dismal second-quarter earnings report on Tuesday—showing just 4% ad revenue growth—the parent company of Snapchat is becalmed. Aside from Elon Musk–owned X, it’s hard to think of a social media firm that’s growing more slowly. Reddit last week reported 84% growth in second-quarter ad revenue. Reddit’s ad business is less than half the size of Snap’s, which means it’s easier to grow faster. But Meta is many times Snap’s size, and its ad revenue grew 22% in the quarter. Pinterest hasn’t reported yet, but in the past few quarters it has significantly outperformed Snap in ad growth. ByteDance’s TikTok isn’t public, but even with the threat of a ban hovering over it, that app grew like gangbusters last year, the latest period we have data for.