Why Snap Stocks are Down 13%: Headwinds & Lack of Guidance

Snap stocks just dropped over 13%. That’s big news. We’ve seen ups and downs before, but this fall stands out. Why? Because it’s not just about numbers, it’s about the silence that followed.

Snap released its earnings report for Q1 2025. Revenue was up. User count grew. Losses were smaller than expected. That should be good news, right? 

But one thing was missing: guidance for the next quarter. No hint of what’s coming. Investors don’t like that. We also can’t ignore the outside pressure. Changes in U.S. trade policy are making it harder for Snap to earn ad money from big Chinese brands. That’s a problem for a company that depends on ad dollars.

Let’s evaluate what happened, what’s causing the trouble, and what Snap is doing about it. 

Q1 2025 Financial Performance

In the first quarter of 2025, Snap made $1.36 billion in revenue. That’s 14% more than last year. The company lost 8 cents per share, which was better than expected. Experts thought the loss would be 13 cents. Snap also gained more users. Daily active users grew to 460 million. That’s a 9% increase from last year.

Despite the positive metrics, Snap chose not to provide financial guidance for the second quarter of 2025. The company cited macroeconomic uncertainties as the primary reason for this decision. This lack of visibility into future performance led to apprehension among investors, which contributed to the stock’s decline.​

Impact of U.S. Tariff Policy Changes

Recent changes to the U.S. “de minimis” tariff rule have posed challenges for companies like Snap. This rule previously allowed Chinese retailers, such as Temu and Shein, to ship low-cost goods directly to U.S. consumers without incurring tariffs. 

Closing this loophole made some retailers spend less on ads. Stores like Temu and Shein pulled back. This hurt Snap, which depends on ad money to make revenue.

Broader Advertising Market Challenges

The advertising landscape has become increasingly competitive. Major players like Meta and Google are capturing a larger share of ad budgets, making it challenging for Snap to maintain its position. 

Additionally, there’s a general slowdown in brand advertising, especially in consumer discretionary sectors, which further affects Snap’s advertising revenue.​

Strategic Initiatives and Cost Management

In response to these challenges, Snap has undertaken several strategic initiatives:​

• Snapchat+, their paid service, grew fast. It now has almost 15 million users. That’s a 59% jump from last year.
• Snap also added more advertisers. The number grew by 60%. They focused on small and medium businesses.
• Snap plans to spend less money this year. They now expect costs to be between $2.65 billion and $2.70 billion.

Analyst and Market Response

Experts have mixed opinions about Snap. Some say Snap is trying hard, cutting costs, and finding new ways to earn money. But others are still worried. Big tech rivals like Meta and Google are tough competition. Also, Snap did not give a forecast for the next quarter. That made investors more nervous about what’s coming next.

Wrap Up

Snap stocks went down for a few reasons. The company didn’t give a forecast for the next quarter. New U.S. tariff rules hurt ad money from some sellers. The ad market is also tough right now. Snap is trying to stay strong. It’s cutting costs and making smart moves. But investors still worry. Snap needs to show good results in the next few months.

Frequently Asked Questions (FAQs)

Disclaimer:

This content is for informational purposes only and not financial advice. Always conduct your research.