Snap’s Struggle Behind the Spotlight: Why It's Falling Behind Meta and Twitter

While social media giants like Meta (Facebook) and, historically, Twitter (now X) continue to command impressive growth and investor confidence, Snap Inc.—the parent company of Snapchat—has faltered. Despite increasing daily active users and expanding digital engagement, Snap is facing mounting challenges that are eroding its competitive edge and investor trust.

One of the most pressing issues is Snap’s ongoing difficulty with monetization. In Q2 2025, a significant technical failure in its advertising system allowed ads to run at unexpectedly steep discounts, cutting deeply into ad revenue. This glitch didn’t just lead to lost earnings; it amplified broader concerns about the company’s ability to reliably monetize its platform. While competitors like Meta and Reddit enjoyed strong double-digit ad revenue growth—Reddit saw a staggering 84% increase—Snap’s revenue barely ticked up 9%, spotlighting its comparatively weak execution.

Underlying this struggle is the fact that Snap’s average revenue per user came in lighter than expectations ($2.87 vs. $2.90), a key signal that the platform’s monetization model isn’t keeping pace with its user growth. Even with 469 million daily active users, Snap’s guidance suggests user growth is decelerating. For Q3 2025, daily active user (DAU) growth is expected to slow to 7%—its weakest on record. Meanwhile, infrastructure and AI investment costs are rising, further tightening margins.

Profitability is another major roadblock. Snap posted a net loss north of $262 million in Q2 2025—wider than a year ago despite revenue growth. Its adjusted EBITDA margins have also deteriorated, falling to just 3%, down from 4% in Q2 2024 and sharply lower than the 8% margin in Q1 2025. This signals shrinking efficiency and growing operational pressure.

Competitive pressures only compound these struggles. With platforms like Meta and TikTok offering lower-cost, more effective ad products—and new players like Reddit encroaching on Snap’s share of digital ad budgets—Snap appears stuck in the middle. Its perception as a youth-focused, less brand-friendly platform limits its attractiveness to advertisers seeking broader and more professional digital campaigns. Notably, over 60% of Snapchat users skip ads, reducing campaign impact.

Despite these headwinds, Snap continues to trade at a valuation premium relative to rivals like Pinterest, a disparity that’s becoming harder to justify. A steep 15–19% post-earnings drop in its stock highlights waning investor patience.

Snap’s captivating format hasn’t translated into financial sustainability, leaving it overshadowed by more adaptable and profitable peers in the media landscape.